By any reasonable standard, an average 51% profit improvement (EBIT), across a number of established business (average turnover of more than $16 million), over three years is very good.
We knew, using our profit improvement process, we have been getting great results for most clients for years.
But it wasn’t until someone said, “Why don’t we take all the results we can find, good and bad, and calculate the average profit improvement over three years worth of results?”
That was a water-shed moment! Without being selective in any way and having the analysis reviewed by at least six of our senior advisors, the results are in.
CFO On-Call clients have had an average increase in profit of 51%* on an average increase in revenue for the same clients of just 15%.
When revenue grows, typically profit doesn’t grow relatively. In many cases it goes down because focus isn’t put on ensuring increased revenue flows to the bottom line.
Due to the involvement of CFO On-Call, cost control and expenses for our clients was – and always is – a prime focus – the result being an increase in profit of more than three times that of revenue.
To put the percentages into perspective, here’s an example of one client’s experience:
2016 2017 2018
$17.1m $19.3m $21.8m
2016 2017 2018
$1.9m $2.6 $3.4
In this example, revenue grew by 27%, but profit grew by 79%!
What this demonstrates is that business owners who stick with a CFO On-Call profit-improvement process get results sooner than those who focus just on sales growth. These clients have given us the time to work in their business and together with them, we have achieved these very satisfying results.
In some cases, revenue didn’t grow at all, however profit did!
Here’s just some of the tactics that are part of the CFO On-Call profit improvement process:
- Promoting profitable (and eliminating unprofitable) product groups or product items
- Helping with effective staff performance
- Helping set lower levels of overheads costs
- Ensuring critical customers are effectively serviced and maintained
- Ensuring the most cost-effective finance facilities are in place
- Establishing meaningful and effective KPIs to measure results regularly
- Effective balance sheet management of accounts receivables, accounts payables and inventory levels.
Obviously, we can’t take credit for all the improvement – especially revenue – however from experience, we are very confident the increases in profit would have been almost impossible without our input and guidance to set up and manage the process over the period and hold participants accountable for actions and results.
If you’d like to achieve results like these in your business, please get in touch with us. We are happy to have a chat to see how we can help you achieve your business goals.