How one simple figure transformed this business
By Susan Clegg, AVN
As an accountant, it’s not often that you know the exact impact you’ve had on your clients. You might give them some advice or a useful report, but you don’t always know if they’ve taken it in.
So Giles Corby of Merlin Accountancy was surprised when his client told him the tax bill he had to pay was all his fault.
Giles had been working with the client for a couple of years and knew the business wasn’t doing brilliantly well. Turnover was inconsistent and gross profits were around 15%. The client – who is in the construction sector – had told him he was aiming for 20% gross profit, but hadn’t managed to achieve this.
Increased turnover and profits
But as Giles went through the accounts he saw that turnover in 2020 had increased to twice the size and gross profit had leapt astronomically – to 51% (hence the tax bill).
“When I asked him how he’d managed it, he told me it was my fault!” Giles says. “The previous year I’d run a BenchMark report for his business, comparing his performance to others in the construction sector. It’s something we do for all our clients. The report showed that the top performers were getting around 48% – 49% profits, way more than the 20% he’d been aiming for.”
And showing the client that simple figure changed things completely.
“When he realised what his profit expectations should have been, his mindset changed completely,” Giles comments. “Knowing that others were making such high profits made him realise that he could do it too. He told me that when he goes out to negotiate for jobs now, he fights really hard for a 50% gross margin. And it’s paid off massively – in the first 9 months of 2020 he made £100,000 profit.”
What’s even more remarkable is that the client managed to do this in the year that businesses faced more challenges than ever before as they struggled with the COVID-19 pandemic.
Working together
Giles now intends to work more closely with the client
“We plan to meet up regularly so we can keep on top of the numbers and find out what he wants to achieve. We can help by giving him targets and actions and then start holding him to account. As a small, family run business having someone external in this role is really important.”
Not everything you do will have such a dramatic result. But the impact of that one simple figure on Giles’ client shows what a difference you can make.
Do you want to have the same kind of impact on your clients? Get in touch to find out more about the BenchMark software. Contact AVN on info@avn.co.uk or call 01246 571191.