The Challenge

Tim McKinnirey came to me twenty years ago with an idea for a start-up. He’d been working for a large contracting firm as an electrical contractor, and wanted to strike out on his own. He saw the opportunities, and thought he could find the right clients. But would his idea have legs?

Using my trademarked Strategy to Cash® methodology, I figured that if Tim could turnover $200K, he’d pocket $50K profit. At the time, he was making $80K in wages, and a turnover of $200K seemed more than achievable. ‘Let’s roll the dice!’ Tim declared.

The first year, Tim turned over $700K. Big smiles all around. I worked with him over the next 20 years as he grew the business into a monster—turning over $20 million, with clients in Queensland and South Australia. Then we dropped the ball.

When I checked the forward accounts, I realised Tim was staring down the barrel of a $500K hole in four to five months’ time. I double-checked my calculations. Yes Houston, we have a problem. I rang Tim to let him know.

The Solution

Turns out our quoting method had failed—or rather, we’d failed it. This system had been a major driver in T&D’s mammoth growth. It tracked everything. Tim knew his acceptance rates, his forward bookings, and his future turnover. But complacency had set it. Tim’s second-in-charge kept buying consumables, without realising the margins were thinning. Result? Less profit on each job.

Compounding the problem, a couple of big projects were delayed. Not Tim’s fault, but the forward accounts don’t lie. Result? T&D’s cashflow would be choked for several months.

The Result

Fortunately, we caught the problem early. Sure, we’d underquoted on a few contracts, so we had to let them just wash through the system. In the meantime, we strengthened the quoting process, so we could track the margins on all aspects each project. We also looked at trends over time, so we could anticipate future price rises and disruptions. It didn’t take long to set T&D back on track, and back in the black.

$500K seems like an expensive lesson in the bleeding obvious. It showed us you can never rely on computerised accounts, no matter how sophisticated. The operators still need to remain alert for changed parameters, or errors in the initial assumptions. But a less robust quoting system could have cost T&D twice or three times as much. Building resilience into the business minimised our losses. Taking our eye off the ball? Not so much.

© Evan Bulmer