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“Don's [BusinessNAV] ability to translate our needs, plan our program and focus our group on how to achieve our goals exceeded my expectations."

Thomas Hegarty, Managing Director, Ready Flowers 

The Situation

Ready Flowers is a fast growing technology company that provides an on-line based flower arranging service into over 90 countries, with a forecast turnover in excess of $8,000,000 for 2010.  The company started from scratch in October 2005 in Perth, Western Australia, moving to Hong Kong in 2009.
 
Thomas Hegarty, the Managing Director of Ready Flowers, was flying on a Qantas flight from Perth to Hong Kong when he heard Don Graham do an interview with Peter Switzer in May 2009 and decided to make the call.  The company had a desire to corporatise its operations and ensure its’ positioning for any exit options.  It also had a more immediate financial challenge; whether to move suppliers over to account from their current system of supplier generated credit card payments.  The question was whether the company could manage the significant cash flow implications.   


It was important to get these fixed for several reasons:

  1. The founders wanted to sure up the business financially after all the hard work and personal investment that had gone into the business.
  2. To do this they needed to have control of the numbers so they knew where they were at, where they were going, and how they were going to get there.  This means they needed reliable and timely information.
  3. If they were going to grow to a $100M turnover business they needed to develop a staff program around attaining and retaining quality people.

 

The Solution

BusinessNAV was brought in to implement its CashflowNAV systems for use by the company.  It was agreed to start the process with a 2-day strategic planning day.

This early process uncovered basic issues experienced by many aspiring mid-market business:
  • Management who understood their growing business very well, were experiencing challenges with cash flow
  • Management who were disciplined in the continual monitoring of operational numbers, were not meeting regularly, or strategically, on the finance numbers of the business
  • And as it turned out, the management accounting function, although accurate in its’ process, was not keeping pace with the business and no timely reporting was available
BusinessNAV calculated the CashflowNAV Factor of the business, and ran the scenario of changing the payment arrangements for suppliers.  CashflowNAV creates an index of the key cash flow drivers of your Profit & Loss and the Working Capital components of your Balance Sheet to get a single positive or negative ‘Factor’ representing whether a business has a positive or negative Cashflow Structure.

The Cashflow Factor showed a marked improvement to be gained from the change of arrangement with suppliers, so this decision was capable of being made,

The company committed to a process of monthly finance meetings with key managers, and undertook to get its’ management accounts out in time for this new end-of-month timeline.

 

The Result

The current Cashflow Structure meant if they didn’t do anything it was going to be difficult, without significant outside investment, to reach their long-term $100million turnover target.

The application of CashflowNAV Factor to the business’s financials meant management was able to identify that $100,000s were being lost in their current supplier payment structures.  Now a decision could be made to put them on account with the full cash-flow effect worked out easily. It could be monitored on an on-going basis using the on-line CashflowNAV application.

CashflowNAV shows the end goals in terms of cash that is available.  The simple terminology and targets used in monthly management meetings meant there was nothing lost in translation as they managed their business from multiple locations around the world.  The targets were clear.  In addition, the on-line nature of the CashflowNAV applications meant that all managers had real-time access to this vital information as it came available.

Within 9 months of that Strategic Planning session Ready Flowers has made a number of hard decisions to ensure its future success including a number of staff changes.  Firstly a General Manager, and more recently a company accountant who has been appointed to support the rigour incorporated into the monthly management meetings. More work is being done in this area. 

They are completing the financial modelling of the business as a natural extension of the strong operational modelling that had been in place.  They have put forward projections in place and are prepared for monitoring of their performance, and re-forecasting, again using CashflowNAV, as the business moves through each financial period. 

The biggest lesson in this for Ready Flowers is they had been given an opportunity, they knew what they had to do, and it was their responsibility to act on it.  “It is something you do for your staff, your family and yourself,” said Thomas.