SME IMMINENT CASH CRISIS

The Client

An eight year old events management and communications company.

The Challenge

The business had been very successful over the first six years of its life. It operated a very conservative accounting policy and the owners had left cash in the bank equivalent to six months turnover. The business was run by a very close and friendly team who were totally committed to the company.

During the recent recession the business had managed to replace the events management business (which had reduced dramatically) with additional communications work and this was keeping the team busy. However, it was recognised that the events work was the profitable part of the business and the company started to lose money and eat into the substantial cash reserves.

We were called into the business when the cash reserve was almost zero.

The Solution

Axios carried out a top level crisis review with the owners and all members of staff. It was clear that everyone in the business was passionate about the company and all it offered. It was also clear that the owners understood that most of the work being undertaken was not making a profit, but they wanted to keep all the staff (their friends) busy. Most importantly, the owners had not been prepared to make the difficult decision to rationalise the business.

It was agreed that we would mentor the owners through the next few months as it was clear that they were going to need to make some difficult decisions and to rationalise the business.

On a monthly basis we reviewed the business and supported the business throughout this difficult time.

The Results

The business down sized and focused on its profitable business. This enabled the regeneration of a cash reserve which in turn allowed the business to market itself in the right areas and to embark on a plan of steady sustainable growth. The business was saved.