Industry: Building supplies

"CashflowNAV gives us a system for managing and projecting our cash flow and it integrates with our existing accounting package easily.  It has become an essential tool in the management of our business"

James Marriott, General Manager

BRW Fast 100 in 2008!

The Situation

CashflowNAV was indicating that for every dollar of sales growth brought in, the business was ‘gobbling up’ an additional 20c in investment monies from the owners and banks.  The situation was unsustainable.  The owners had less than $100,000 of their own cash invested, but had mortgaged family investment assets to support bank debt.

The business had no hard information as to what marketing strategies were working best and wanted guidance on the direction of its proposed marketing campaigns to drive sales.

The Solution

In August 2005 the company arranged for the implementation of BusinessNAV’s CashflowNAV and MarketNAV management systems to assist with future growth planning, and address short-term cash flow issues. 

Initially, the business made changes to its buying relationships and supply cycles to achieve better margins and more manageable stock holdings, and then set to work controlling credit extended to customers.  It was a nervous first six months where the owners were concerned if they’d made the right supplier decisions, and whether clients were going to leave as a result of firmer controls. 

Quickly, MarketNAV was able to demonstrate that Ozbuild was reliant on generating 40% of sales from new customers, each and every month.  Further, it’s advertising campaigns yielded just over 20% conversion to sale, and even less from web site enquiry – all at significant cost to the business. 

It shifted its target market to returning customers. Low-conversion, cash-intensive marketing campaigns were dropped in favour of more leveraged strategies.  Each month now, OzBuild’s sales and marketing team sits down and reviews what marketing and sales strategies are working, and strategises for growth - right down to the number of leads it needs to generate.

The Business Result

Ozbuild’s management team switched to a new diet of monthly reporting. Within 6 months, Ozbuild’s CashflowNAV Factor had improved to such an extent that it was now merely ‘swallowing’ an additional 2c in investment monies from the owners and banks, from additional sales growth.

Cash flow management has been a key to sustaining growth.  Given its cash flow structure in 2005, Ozbuild would have required approx $1.2m in working capital funding in order to achieve its spectacular growth.  By rigorously applying the CashflowNAV management system, Ozbuild was able to fund its growth with only $200k in additional funding – a saving of almost $1m!
 
Since Ozbuild Materials began using BusinessNAV’s CashflowNAV and MarketNAV management applications in August 2005, its average annual sales have increased 88% year on year, and in 2008 made the list of BRW’s Fast 100.