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"From working 80 hours a week to just 10 – the incredible difference this accountant made"

 

Background information

Adam’s Cash & Carry Ltd is based in Peterborough and supplies food and other products to the catering trade. The company founder, Abdul Aziz, started the business in 2001 out of frustration with the poor service he had from his suppliers when he owned a fast food outlet himself. He had a clear vision of what a great supplier should look like and a driving ambition to succeed.

 

Debt was out of control, cash flow was poor, as was the credit rating of the business, and suppliers were not willing to extend credit terms.

 

Abdul attended a seminar run by Entrust in December 2011.  At that time he had recently moved the business to a 2.67-acre site with a 30,000 sq ft warehouse, all on a much bigger scale than his former premises. Debt was out of control, cashflow was poor, as was the credit rating of the business, and suppliers were not willing to extend credit terms. The new site had cost £1m and the business had had to fund the £200,000 VAT element of the purchase themselves. Their accountant at the time had told them it would take 3-4 months to reclaim the VAT and having such a large sum locked up had put the business at risk of closure. This risk was compounded further when the business was refused loans to invest in a £200,000 commercial freezer which they needed to store the bulk of their stock.  

The business’s profit margins were around 11 per cent and Abdul couldn’t see any way to improve them. He was convinced that the only way to gain and retain customers was to keep his prices low.

Abdul was central to all decision-making, so he was working for 70-80 hours each week. As well as the impact on the efficiency of the business, his home life was seriously affected as he had very little time to spend with his wife and family. At the same time, the lack of certainty was becoming damaging to his team’s morale and motivation, which in turn impacted customer service.

Worse still, his bookkeeper was unreliable, which meant that Abdul wasn’t equipped with the accurate and up-to-date information he needed to stay in control.“He made lots of errors and took up too much of my time,” Abdul says now. 

Abdul felt he was paying too much tax as others in his industry were telling him this, but his accountant had never suggested any form of tax planning. This was causing further cash flow issues. 

 

“Getting a refund within a week of the VAT return being submitted is literally unheard of!” 

 

Without a clear vision and direction for his business, Abdul was facing an uncertain future. Things began to change when he attended the “How to get an extra £2 million from your business” presentation which opened his eyes to the potential within his business and he immediately started work with Shaz Nawaz of Entrust.

The most pressing issue was the VAT refund that had put the business in jeopardy. Shaz worked with his contacts at HMRC, submitted the VAT refund prior to the end of the quarter and negotiated the refund within a week of the submission. As Shaz says, “Getting a refund within a week of the VAT return being submitted is literally unheard of!”.

The new premises had been bought from a large corporate and they had initially valued the plant and machinery at £1. Shaz liaised with a capital allowances specialist and entered a claim for £269,444. After long and protracted negotiations the claim was successfully agreed, resulting in a huge tax saving.

Once these big issues had been dealt with, Shaz began a thorough overhaul of the entire business. He recalls, “we had carte blanche to introduce as many systems as necessary to improve the efficiency of the business. Through working with us, Abdul had experienced at first-hand the benefits of having robust systems and processes and he knew that this was the way for his own business to run smoothly and efficiently in his absence."

“We built and developed a new team culture, one which was focused on outcomes and results. Client care was the number one priority and we worked diligently with the team to improve this."

“In addition we worked through the whole business structure, implementing systems for sales and marketing, client grading, referrals, admin duties, efficiencies, team management and every other area of the business. This resulted in the team working more cohesively and customers were delighted as they received a consistent and improved service.”

Abdul was at last freed from the day-to-day running of his operation and able to take a more strategic role in driving his business forward. 

More profitable pricing – Benchmarking the business against the competition showed Abdul that it was possible to achieve higher margins. He was persuaded to increase his prices, on a step-by-step basis. The results were almost immediate – a 19.2 per cent increase in his gross margin ratio. The actual gross profit, in monetary terms, increased by 109 per cent. 

The sales team began to systematically target a higher proportion of the ‘diamond’ (i.e. top grade) customers, as these were the most profitable, and they developed a specific diamond client care programme. High-margin products that weren’t selling well also became the focus of a new cross-selling initiative.

Increased overdraft – Shaz set up a meeting with himself, Abdul and the bank manager to discuss increasing the overdraft. He compiled a succinct One Page Business Plan alongside a projection and cash flow statement to demonstrate how the business would service the overdraft and improve its financial standing.

 

“The bank manager was extremely impressed with our plans and our professional approach to assisting our client,” Shaz says. “He agreed the increase in the overdraft, and due to being so impressed with our approach, he also became an introducer to our firm, referring his contacts to us.”

Tax savings – Shaz arranged two meetings a year with Abdul (one pre and one post-year end) to discuss remuneration and corporation tax planning. Using AVN tax planning software, he was able to show Abdul all the options for extracting profits from the business so he could make the best decision and plan for the future. With some additional advanced tax planning, Abdul saved £15,000 in one year alone.

 

Better financial information – As the management information was so weak, Shaz arranged for one of his team to work in the business one day a week as the company’s finance director. This meant initially arranging and supervising the training for one of Abdul’s team and then implementing regular reviews of the financial statistics for the company and the production of management accounts.

 

Clarity of vision, mission and goals – The One Page Business Plan helped Abdul to clarify what he wanted from the business and how he defined success in measurable terms. Shaz explains, “We held strategy sessions with the senior team to get their input and their buy-in and worked with the whole team to gain clarity on the purpose of the business. From there we developed a clear mission for the business and by focusing on where they wanted to be in 3 and 5 years, the senior team members were able to help articulate the vision. We then agreed on SMART goals to help the business achieve its vision and mission.”

 

The difference we made

The biggest change has been to Abdul’s work-life balance and the positive impact this has had on family life. Abdul can now spend much more time at home with his wife and children, so everyone is happier and less stressed. His son had long held an ambition to be sales manager of the business, but Abdul had always felt he was too inexperienced. With an external training programme and additional support from Shaz, he was made sales director in January 2015.

Over the three years of working with Shaz, the business has seen turnover increase by 104 per cent, gross profit margins increase by 19 per cent and net profit increase by 142 per cent thanks to the new innovations and efficiency measures they developed together. 

Debt has reduced by £128,763, 12 additional jobs have been created and, with a huge investment in team development and training, many existing team members have been promoted to senior roles.

Average customer feedback scores have risen from 6.6 to 9.1. Customers are spending more, and some have developed into diamond clients. The business gets more referrals and customer retention rates and lifetime value have improved.

 

How it made them feel

“Excellent!”

This is the word Abdul uses to describe his life now – a very long way from the hopelessness he felt before he started working with Shaz.

As well as the success of the cash and carry business, he has been able to fulfil his ambition of becoming a property developer. Shaz has helped him to purchase eight new properties and to develop a piece of land to build 20 flats. And even more excitingly, he has also started flying lessons with the aim of becoming a pilot.

Entrust has been able to utilise the full range of their knowledge and expertise to support Abdul, and has brought in all the AVN tools and software to assist them. “It’s been a hugely satisfying experience,” Shaz says. “We’ve charged a five-figure fee for our services and Abdul has been happy to pay that because he could see the ROI almost immediately. The hard numbers speak for themselves, but we all like to see the human side of success too, as, ultimately, this is more important than the numbers. What all this proves is that when you apply the processes the numbers will work for you and the effects can and will have a profound effect on the lives of those involved.”

Abdul was even finally able to afford to buy his dream car and the time to enjoy it.