The client is a small (owner plus two apprentices,
plus the owner’s spouse performing some admin and bookkeeping work) electrical
business located in a small town towards the northern edge of the Hunter
Valley. While all employees live in this
small town they service clients as far south as the NSW Central Coast and west
They provide a wide variety of low voltage electrical services to residential, commercial, agriculture and government (particularly Transport for New South Wales Transport and the Department of Education).
They have two fully equipped vehicles sufficiently
stocked to meet the day to day requirements of the customer base.
After several years working for a Hunter based
electrical products wholesaler the owner and his wife established the business
In the following 19 years there have been periods
of growth and contraction. The one
constant appears to have been frustration at the lack of sustained growth and
profitability. Staff continuity has also
been an issue with several apprentices having worked for the business but not
stayed long term.
The business is the sole source of income for the family, and while it has provided a consistent and comfortable enough year-on-year income it has not set the family up for the long-term lifestyle they desire. As the owner put it “they’d had one year repeated 19 times”, and something had to change, or this pattern would continue indefinitely.
In June 2018 a Business Diagnostic showed more than
$75k of potential profit leakage on the current turnover of $600k. Peter Coughlan from BSPA was engaged to help
improve the profits, growth and value of the business.
The first step was to proceed with preparation of a
strategic business plan. This was
facilitated by weekly meetings over the first 10 weeks. Concurrent with this, a
series of immediate actions were put in place to better share the workload,
improve systems and reduce the very high reliance on the owner in all aspects
At the time of writing this case study there
naturally were no discernible financial changes, which in fact were not
expected as the business was not requiring rescue.
Accordingly, this study is going to focus solely on
some of the poor business behaviours which were identified and for which
immediate actions could be taken.
Regrettably these behaviours are common place in many businesses and
always lead to sub-optimal performance.
Issues & outcomes
In no order of importance some of the issues
already identified and where correcting steps have already been implemented
- The owner and his spouse had spent minimal time
considering their long-term aspirations for the business, nor indeed how the
business was to form part of their long-term family aspiration over whatever
timeframe. The simple act of being taken
through a holistic planning process has already helped them articulate their
thoughts and clarify their plans.
- It became clear very quickly that staff had been
working in an information vacuum. They
had no accurate idea of the plans of the owner, the performance standards he
wanted nor how their own performance was relative to the owners’
self-appraisals were done by both apprentices, followed up by an open and
honest discussion with the owner clarifying areas where there were differences
of opinion relating to performance.
These employees had been with the business for up to four years and had
never received any structured
feedback regarding their performance. A
BSPA self-appraisal template was provided, and as this was a first for the
owner Peter Coughlan facilitated the staff meetings. The owner is now sufficiently skilled to be
able to conduct future structured discussions on his own, which have been added
to the annual planner (see below) to ensure they do occur.
- The employees constantly “passed the buck” to the
owner. In the event of any problem, no
matter how large or small, they’d be straight to the owner. The owner then immediately answered the
problem – meaning he was always being interrupted. Coaching of the owner has now started a
change in the way he handles these calls.
- This business had no digital presence. The business historically has derived most
of its new customers from direct referrals.
In the digital age, where most people fact-check recommendations via a
web-search, a quality web-site and/or business Facebook page is a must. A digital marketing expert has been engaged
to change this as a matter of priority. Employees are also now aware of the
expectations on them to always be on the look out to provide appropriate
- Financial performance was effectively never
reviewed at either the individual job level or overall. The owners ran the business off
cashflow. Relevant reports from both the
job-costing system (Tradify) and the general ledger (Xero) are now being
prepared and on the agenda for review at monthly management meetings.
- There was no budgeting system in place. Without such a system it is nigh on
impossible to undertake the planning required to properly grow and manage a
business. A BSPA activity-based
budgeting template was used
- There were minimal documented systems. As a result, the owner was on call almost
24/7 to clarify or deal with, often procedural, issues that clearly could be
handled by staff if only they knew what the process was. While this will be long exercise to complete
across all business activities it has now been commenced and staff are better
placed to deal with matters without the need to resort to the owner for
- Tasks, renewals, registrations, ATO matters, even
invoicing customers and the like, were generally undertaken at the last
minute. An annual planner has been
provided, to show on the wall of the office so it’s visible to all staff, so
that all business matters are addressed in an appropriate timeframe.
- A stocktake of inventory/consumables had never been
undertaken. Accordingly, there was lost
time on jobs as staff needed to buy products at the last minute that were
thought to be in stock, while the store room has clutter from obsolete stock.