Mechanical Engineering Business turns around a $1.25M Net loss

06-December-2007

A mechanical engineering company with five (5) branches across Australia and a turnover in excess of $4Million was struggling with high levels of staff turnover, declining sales, low job profit margins, escalating business costs and an overall net loss of $1.25Million for the last financial year. The business had lost focus and was costing the owners significantly and was at risk of being forced to close.

The business owners made the decision to bring ABC Business Coaching in to take over the complete general and financial management for the organization in an attempt to reduce the losses and establish a platform for future business growth well into the future. The approach taken by ABC Business Coaching followed a structured 4 stage process;

Stage 1: Full Business Analysis – A comprehensive evaluation of the business financials, the staff, the business operations, and the business strategic position was completed to identify all issues that existed and a plan of attack was devised for improving the performance of the business.

Stage 2: Consolidation – Having identified the key issues within the business, the consolidation stage focused on reducing business expenditure back to acceptable levels, identifying and focusing on taking on and completing profitable jobs, reducing job rework, and closing down one unprofitable branch.

Stage 3: Rebuild – Once the business had stopped losing money the focus moved to building the business back up with more profitable repeat business with key quality clients. This stage also included the recruitment of some key management staff to drive branch growth as well as the establishment of key systems for business operation. Finally this stage included the identification and establishment of an additional business stream for the organisation.

Stage 4: Leverage – Having helped to rebuild the business back to a positive net profit within one year, the leverage stage has moved the business into establishing new business opportunities across the country and growing the capacity of each branch operation to allow them to increase turnover and net profit contributions. Costs continue to be monitored and the business conducts quarterly board/ management meetings to focus on profit performance and future growth opportunities.

With ABC Business Coaching taking over the management of the organisation and following a structured and affective business change management process within just 12 months the business was able to grow turnover by 25%, improve gross profit by 180%, and turn a net loss of -$1.25M to a net profit of +$171,000, and improve the outlook for the organisation and give the owners confidence in the potential growth of the business into the future.