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Case study: £1m turnover online training provider solved their cashflow problem & improved profit too!

How a £1m online training provider solved it's cash problem and improved profit too

There’s a moment many business owners hit when they reach £1m turnover where, on paper, everything looks great… but in real life it feels anything but.

This business owner ran a successful UK-based online training company, selling high-value courses at around £2,000 each.

Demand was strong and turnover was just over £1m. Yet despite “doing well”, cash was constantly tight, and growth felt harder than it should have been.

Sound familiar?

Growing sales led to cash crisis

With business doing so well the ambitious owner wanted to push on and get to £2m. To increase sales, she introduced payment plans. Three months. Six months. Twelve months.

Same total price whether customers paid upfront or spread it out.

Sales shot up.

Marketing spend massively increased and due to all the extra leads, sales almost doubled.

And then cashflow fell off a cliff.

Money was pouring out on marketing ads whilst cash (thanks to the payment plans) was only trickling in. The owner knew deep down that she had an impending cash crisis. Except, she couldn’t see where the real issue was.

A novel way to quickly fix a cash crisis

The primary cause of the cash crisis was the payment plans. To solve it Krystal Clear looked at the problem slightly differently.

The steps were straightforward:

Step 1: Change the pricing

Keep the upfront price at £2,000.

Increase the 12-month plan to £2,400.

Clearly position upfront payment as the “best value” option.

The impact was immediate.

Around 50% of customers chose to pay upfront. Most of the rest shortened their payment plans.

Step 2: The secondary cause of the cash crisis was the marketing spend

The easiest thing in the world would have been to slash the marketing spend across the board. This would get the cost and cash burn down.

However, what the numbers showed when Krystal Clear analysed them was eye-opening.

PPC was performing well, with room to improve.

TikTok wasn’t converting anywhere near what it needed to.

Step 3: Review the marketing

TikTok Ads were stopped immediately because their performance was very poor.

PPC Ad spend was scaled back for a short period of time to conserve cash. During this time the campaigns were refined to improve their performance before Ad spend was steadily increased again.

The Results

The pricing changes meant

  • £60,000 of cash landed in the bank almost immediately.
  • An extra £9,000 of profit from customers who still chose to pay over time.

The PPC and TikTok marketing spend review saved almost £100,000 a year…and, despite this, the campaigns still generated more sales leads.

It didn’t take long for the business owner to start feeling better and calmer. It certainly helped that the changes were easy to implement and got instant results.

Key Takeaway

Lots of business owners (like this one) have the mistaken belief that to grow their profit and bank balance they need to get more customers and work harder.

In my experience this is rarely the case.

In truth, getting better results is far easier (and more straightforward) than most business owners think…or realise.

Growing sales, profit and bank balances often comes from understanding your numbers and making small, intelligent adjustments that compound over time.

 

If you want to understand your numbers properly, make calmer decisions, and build a business that pays you well without consuming your life, the next step is simple...

Get support from an accountant who doesn’t just report the numbers but helps you use them!

If you would like some help understanding your numbers and ideas to get better results then just get in touch.

To get in touch you can drop us an email to [email protected] or call one of the team on 0161 410 0020.

Disclaimer

You must take professional advice before making any decisions based on the information that you have learnt here. While every effort has been made, to make sure it is accurate it cannot be precisely tailored to your personal circumstances. This article is for general information only and no action should be taken, or refrained from, as a result of this information.  Professional advice should be taken based on specific circumstances in each individual case.  Whilst we endeavor to ensure that the information contained in the article is correct, no liability will be accepted by Krystal Clear Accounting which is a trading name of Kim Marlor Associates Ltd or damages of any kind arising from the contents of this communication, or for any action, inaction or decision taken as a result of using any such information.

Related Articles

In short, bank feeds create a digital link between your business bank account and your accounting software, such as Xero or QuickBooks.  

This means bank transactions are automatically downloaded into the accounting software. This simple piece of automation, completely removes the need to manually input every bank receipt and payment into the accounting software. 

Having bank feeds in place, saves a HUGE amount of time bookkeeping. That’s because it completely removes the need to manually input bank transactions into the accounting software. 

Saving time bookkeeping isn’t the only benefit for the business…. 

 

 

What are the main benefits to a business using bank feeds?

  • Saves Time & Money Bookkeeping

Bank feeds automate, what was previously, a time-consuming task of entering all the bank transactions into the accounting software. 

 This saves the business a HUGE amount of time (& money) spent on bookkeeping.  

  • Improves Cash Flow Visibility

With bank transactions being downloaded from the bank every day, it means it’s quicker and easier to keep the bank balance in the accounting software up-to date. 

With the accounting software up-to date, the bank is updated daily which gives you a clearer, real-time view of your business’s cash flow.  

This makes it easier for you to plan your cashflow, and take action to improve it. 

  • Enhanced Accuracy

There is always the risk of errors being made when data is being manually inputted into the accounting system. It is often time-consuming to find and correct any errors. Also, if an error is large then the Profit & loss and Balance Sheet reports will be inaccurate and potentially misleading. 

 Automating the bank transaction entry previously manual process, reduces the risk of errors being made and ensures that the bookkeeping records and reports are accurate. 

How to Link Your Bank to Xero

  • 1. Setup Online Banking:

Ensure that your bank account is set up for online banking. This feature is typically available from all major banks. 

  • 2. Add Bank Account in Xero:

Log into your Xero account and navigate to the banking section. Select ‘Add Bank Account’ and follow the prompts to search for your bank. 

  • 3. Enable Bank Feeds:

After adding your bank account details, you’ll see an option to set up bank feeds. Click ‘Agree’ to the terms, then securely log into your online banking portal through Xero to authorize the connection. 

 

Are Bank Feeds Safe & Secure?

Yes. 

Firstly, having bank feeds in place ONLY means bank transactions are downloaded into the accounting system. They do NOT give anyone else access to the business bank account. 

 Secondly, XERO has various security measures in place to give you a piece of mind that your financial data is safe and secure: 

 

  • Encrypted Connections: Xero uses advanced encryption technology to secure the data transmission from your bank to Xero. This means your sensitive information is encrypted during transit and cannot be intercepted or read by unauthorized parties. 

 

  • Compliance and Standards: Xero adheres to high standards of data security compliance, thus ensuring that its practices meet or exceed industry security standards and regulations. 

 

  • Regular Renewals: To maintain a high level of security, XERO requires that the bank feed connection is renewed every 90 days. This process is straightforward and helps ensure that the integrity of your financial data is always protected. 

 

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KIm Marlor the MD of Krystal Clear Accounting
krystal clear accounting

In Summary

In short, having bank feeds really saves businesses time and money on their bookkeeping.  

 They automate and eliminate what is otherwise a time consuming and error prone manual process.  

 Bank feeds is just one of the ways technology can be used to help business owners improve the financial side of their business.

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