How an £800,000 event management business made an extra £100,000 profit every year by fixing the holes in the leaky bucket
When I first met James, the owner of a growing event management business turning over around £800,000 a year, he was frustrated. Frustrated that, after years of trying, he was no nearer the dream of retiring within five years.
In good years, the business made a healthy profit. Most years, though, were ‘average’ and in an average year the profit just about covered the bills and his dividend. No matter whether the year was good or average cash in the bank was almost always tight.
To retire within five years, profits had to increase – significantly and quickly.
What he realised was that he needed a clear road map to make that happen and he needed someone to help him.
The Plan: Simple, practical & profitable
Step 1: Monthly management accounts & proper review
Instead of annual surprises, James began receiving monthly management accounts and we met regularly to review performance and talk through issues.
For the first time, he could see exactly how the business was performing and why.
That clarity immediately improved his decision-making.
Step 2: Fix cashflow
Recharge sales invoices had historically been raised 6 to 12 months after supplier invoices were paid. This delay was crushing cash.
We changed the process straightaway, so recharge sales invoices were raised at the end of every month.
In the first month alone, this simple shift generated just over £120,000 of cash into the bank.
Step 3: Stop being “Good, fast and cheap”
Through reviewing the numbers, one uncomfortable truth emerged: the business was positioned as good, fast and cheap.
You cannot be all three and still expect the business to make a healthy profit.
When contracts renewed, prices were increased significantly – because the value they were delivering clearly justified it. Every client stayed.
Step 4: Charge for the value you’re already delivering
This was the breakthrough.
For every new charity client, the onboarding process included a detailed review of marketing and procurement systems. Often, they were sub-standard and required substantial improvement.
The initial review and remedial work were done “as part of the service.”
In reality – it was all done for free.
So, we created two new services:
• Health Check service
The written report gave the trustees a full assessment of the charity’s key areas.
It highlighted cost saving opportunities – usually tens of thousands of pounds.
The Health Check was now charged at £5,000. It came with a money-back guarantee if £5,000 of savings weren’t identified.
• Systems Implementation service
To fix the issues uncovered in the Health Check. The typical price was £30,000.
We also defined clearly what was included in the annual service and charged for anything outside of it – ending years of scope creep.
Where savings were quantifiable but uncertain at the outset, we introduced value pricing with an 80/20 savings split.
The Result: £100,000 increase in annual profit
Profits increased by over £100,000 a year.
Over five years, that’s an additional £500,000 – enough to make retirement not just possible, but comfortable.
More importantly, the extra profit stayed in the business, building a cash reserve and eliminating the constant background anxiety about cashflow.
Key Takeaways
- Clarity on your numbers changes behaviour.
- Cashflow problems are often process problems.
- If you’re doing valuable work for free, you are subsidising your clients.
- Positioning matters – you cannot compete on everything.
- Small operational changes can create six-figure improvements.
If your business is turning over £500,000 and you know there’s more profit hiding in plain sight, but you’re not quite sure where - let’s change that...
Retirement, financial freedom, and a stronger bank balance don’t happen by accident.
If you’re ready to stop guessing and start building a business that funds your future, let’s have a proper conversation about it.
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.
