- Business Growth Services, Xero Finance Director, Business Consulting Services
A medium-sized charity (250+ staff) came to us in the depths of a serious financial crisis. They had just made losses of £1.75m. The losses had come as a nasty surprise to the Trustees, who had not had really accurate information until the year-end accounting adjustments were completed.
The core issue was that, in common with many charitable and public-sector enterprises, they were heavily reliant on government funding. Not only had this been drastically cut in recent years (surprise surprise) but also the whole basis of funding had been changed from a headcount/activity cost-plus basis to more of pay by results system. The lessening of funds had severely impacted revenue and profitability. In addition, the legacy systems of accounting had not been modified to cope with the increased complexity of the revenue model. As a result, not only were surpluses being eroded, the Trustees did not get visibility of this until far too late.
It’s tragic when this sort of thing happens in private enterprise, with so many livelihoods at stake. When it’s a charity involved though, there is also a potentially severe impact on the weak and vulnerable in our society that they serve.
In situations like this, the first thing that to be established is clarity on the financial position. You must know how deep in the hole you are before you can make sensible plans as to how to get out of it. Speed and clarity of analysis are off the essence.
Our consultants typically come from a large consulting firm and corporate backgrounds who are used to dealing with these sorts of issues.
We worked with the FD to restructure the understanding of what is a complex operational environment breaking them down into 4-5 divisional profit centres. This gave some real clarity as to where the problems were in the charity. Interestingly these were in quite a different area than management had originally thought. Had they acted on their initial analysis they would have made a bad situation a lot worse!
We then worked with an interim Director to plot a way out of the losses and get the Charity back onto a stable financial footing.
We are pleased to report that several years later, and a lot of hard work by the Management and Board, those plans have come to fruition and the losses have been reduced from £1.75 to a small surplus expected at the end of this financial year.
Here’s a couple of questions for you. Are you confident that you fully understand the financial position of your business today? Are you experiencing significant profit and cash flow pressures? Is the business undergoing major changes, positive or negative, which is often when the wheels come off?
If you could do with some solid practical advice, Business Growth Services provide a wide range of Business Consulting Services. This normally starts with financial analysis to get Crystal Clear Clarity on the financial position of the business. It then moves on to developing a plan to turnaround, grow and develop the business. We have a multidisciplinary team of specialists who can bring you insight and capability in Strategy, Online Marketing, Sales, People, Coaching, Systems and Automation. Many of our team are from Large Consulting Firm/Corporate backgrounds giving you high-end expertise at SME affordable prices.
Watch the latest video as Managing Partner, Shaun Walsh, discusses:
If you’d like a chat please do book a quick call with one of our Lead Consultants: BOOK HERE. Or alternatively, give us a buzz on 0115 9480115.