WEB-BASED SALE OF SWIMWEAR & LINGERIE - 'M' LTD
A growing business turning over £500k+ but with a history of small stubborn losses making the founders somewhat war-weary particularly as the business, after staff costs was not generating any meaningful cash for their efforts.
And it's probably not a unique situation for web-retail businesses to find themselves in.
When we initially looked at what it would take to put the business on a fully viable financial footing and what was driving the business's appetitie for cash we were struck by just how close the proprietors actually were to making the whole thing work. After so many years effort it was no time to throw in the towel.
But so war-weary were they, I don't think they'll mind me saying that, but they really did take some convincing. One of them, running this in their spare time (basically until midnight most evenings) was holding down a very demanding, high-level job in the City. So their reticence was completely understandable.
When the cash flow of a business is not working as you'd like it to, you have to understand the dynamics at play to create better cash flow. Some of the fundamentals have to change.
Not unusually for a web business, there was certainly an opportunity to look at the cost effectiveness of sales promotion. And helped by being a cash (or quasi-cash) business, the underlying cash flow design of the business has started to work. And to facilitate this we have given the owner some simple metrics by which to control the business.
Indeed far from giving up, one of the co-founders has since gone part time in his City job to dedicate more time to the business.
In our work with the directors we have also had the opportunity to help them fight off a £10k claim from a supplier for unsatisfactory work and also supplant their accounting providers with a firm offering much more proactive advice at a keener price.
But the most exciting opportunities are yet to come. With an upgraded website we will very soon be at the point where we can trial responses to various price and volume trade-off's, line-by-line and really drive the sales promotion strategy which we can refine as we track the results through the back-end system.
What does this case demonstrate?
Perhaps that it's particularly important, when you have a lot of emotion and financial capital tied up in a business, to get someone who can tell you how far you are from the finishing line!
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