Increased net profit by 269% in a one-year period by helping a client identify major sources of profit drain
The Problem: A fast-growing client of ours was not as profitable as they wanted to be. While revenues were increasing, net profits were decreasing. The company needed help identifying key sources of profit drain, but did not know where to begin.
The Solution: Gemsbok worked with the company to identify the drivers of profitability. As a service company, their primary costs relate to personnel and their effectiveness at delivering the service lines offered. We helped the company establish:
- Financial reporting that enabled leadership to separately evaluate the profitability of each service line
- Utilization reports that tracked time-spent and, ultimately, the effectiveness of employees
- Project or client-based reporting to examine disparities between profitable and unprofitable projects
- Reporting that analyzed revenue as well as direct and indirect costs on a per-hour basis to observe changes over time
Gemsbok helped this client determine its baseline and then, using monthly reports, was able to track changes going forward. We then trained the client’s staff on new systems, helped establish performance expectations, and remained involved until the client and systems established were prepared to run on their own.
The Result: These monthly reports helped this client discover that they were not charging enough to recover the cost of some of their more expensive service lines. In addition, it enabled much more visibility into the performance of their staff. After increasing their prices and resolving staff inefficiencies, this company increased net profit by 269% in a one-year period.