A business turnaround;

Earlier in his career, Howard Bayliss led the finance team in a £5m turnover engineering consulting firm. When he joined, he soon discovered that the business had a number of serious issues including:-

• Lack of financial information – directors were relying on quarterly management accounts prepared up to a quarter in arrears;
• Absentee majority shareholder meant that the company was unable to incentivize key senior staff who were leaving and taking clients with them;
• Non-profitable Irish and Eastern European subsidiaries;
• The business frequently exceeded its £700,000 overdraft limit, damaging banking relationships.
• This led to the directors having charges over their homes;
• All of the above contributed to the business being under pressure and loss-making.

Actions taken by Howard to help turnaround the business included:

• Introduced monthly management accounts with the UK P&L broken down between the 5 UK offices;
• Increased focus on financial performance;
• Disposal of Non-profit making subsidiaries;
• Cash flow improvement including reducing the length of the invoicing cycle and encouraging relationship holders to take responsibility for overdue debt;
• Replaced overdraft with invoice finance facility, removing directors' charges/guarantees in the process;
• Absentee majority shareholder bought out allowing senior staff to buy in, bringing cash into the business.

Outcomes:

• The business performance improved from £300,000 loss to £625,000 profit in 4 years
• Debt was reduced to zero over that period
• The business was then sold to a trade buyer