He also had a cash problem
For small businesses rapid growth is a blessing and a curse because it can make or break the business.
A huge contract needs unprecedented resources. To secure resources you need cash. But when you’re living under the promise of accounts receivables, you will find yourself trapped in the stress of unfulfilled payments and waiting from cheque to cheque.
Which is where Ian was when I met him.
A $2M a year payroll and a fresh intake of 40 new employees in order to fulfil the latest contract.
Ian: “I have up to 100 employees, serving 2.000+ hours of security services per week, at 22 locations. Our payroll is $2 million a year and we pay our employees weekly”
Ian: “ When you don’t know for sure if you can pay your people, you run the risk of them walking out on you. That’s when you start losing clients and the business you’ve built so far."
First of all we cleaned up the receivables.
Finally, to give Ian maximum visibility into his finances, we created a cashflow model for him. Beyond the main account, we created 3 more accounts (payroll, spending, tax & worker’s compensation account). This way instead of everything being muddled together, Ian knows whether this month his payroll account is running low and he can focus on building it up.
Thirdly, we separated personal expenses from the business. Instead of running any expenses through the business we settled on paying the owner a rewarding salary.
Second, we put a strict collections process in place. Twice a week we would email every single client.
Change had to happen fast for this entrepreneur
Finally seeing how much money he was making so that he could gain a sense of achievement from his business
Relief from the stress that there may not be enough cash to cover payroll or taxes
When your business is only bringing you stress and you can’t ever see the achievements you’re on a sure path to burnout, and ultimately, resentment.
What this accomplished for Ian
Ian: “Financial stress is just not something I’m trained for. Keeping people safe is what I do best! Six years in the military, law enforcement, then managing security for Waldorf Astoria – it means I can take a call at 6 o’clock in the morning about someone being stabbed at one of our locations and I know what to do with it. But thinking that our government will shut me down if we don’t pay our taxes on time, that’s a real danger to me.”
Not all stress is created equal...
My approach as a CFO is to look at the story behind the numbers. Based on the numbers alone, Ian’s business is on a super-fast, high-growth path. I could simply let him continue as it is.
But that would not be sustainable. Ian also has 3 children and a 4th on the way and one of our goals is to create a work-life balance so that he can enjoy his family.
Ian: "When you don’t know for sure if you can pay your people, you run the risk of them walking out on you. That’s when you start losing clients and the business you’ve built so far."
Our focus for 2023 is to bring more freedom for Ian so that he can focus on his mission to support more veterans with retraining and upskilling.
The secret to our work together…
Ian is the type of client I absolutely enjoy working with, because he has such a great love of learning and welcomes any suggestions with an open mind.
This is when I know I can help the most. Trusting that I’ll always put people first, and especially in a service-based business like Ian’s means he went in with full confidence…
Ian: “If you’re at a certain size you’re gonna need her! She probably saved me $20k in fines.
I think if you’re running at $1 - $2 mil. in revenue, it’s time to think about getting Admira on your side. Because the IRS is gonna want you to start filing monthly! And you just won’t keep on top of everything.”
Ian: “When you talk to somebody and they're an expert in their field, you know when they're just doing it for the money or when it’s someone who has a passion for it. Admira definitely has a passion for it. I went in with full confidence and ever since she’s made sure we’re in much better shape, so I have no hesitation when signing that cheque every month”
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