A visit from the Business Doctor…
December 17th, 2019
I sat in reception which, even for a Stoke-on-Trent widget company, was a little bit on the tired side. But the receptionist, Rita, was chirpy enough as she rang through to her boss to let him know that I was there.
“Well, this is a pleasant surprise!“ he said as he came through the door to greet me. “I thought doctors weren’t doing house calls anymore?”
“That would be NHS doctors”, I pointed out: “Business Doctors often insist on visiting a company’s premises because they can reveal a lot about a business’ health”.
We sat down at Bill Moreoften’s somewhat untidy desk. “I notice, for example, that your trade counter seems pretty busy but you still have last year’s calendar on the wall in reception”.
Bill handed me a cup of coffee. “You’re right about the trade counter, we are busy. And the order book is doing well, too. But my accountant suggested I get in touch with you because cash flow is not as good as it used to be and I just have a feeling of uncertainty about the way forward”.
“That’s why I’ve brought this”, I told him, holding up the advanced high-tech Business Doctor Tricorder complete with a long probe: “This multifunctional hand-held device will scan your books, sales invoices, customers, bank accounts, spending patterns, people, suppliers, all your peaks and troughs, analyse the data and find the problem. I just need to shove it into the appropriate orifice”.
Bill turned pale. “On your computer”, I added. “Oh right”, said Bill, blowing his cheeks out.
I plugged the Tricorder in and we watched for a few seconds as the coloured lights flashed on and off and the electronic beeps chattered away. A final beep and I retrieved the device and read the display. “Ah, thought so”, I told him.
Bill looked at me nervously. “Wh – what is it doc?” he asked.
“The good news is that the company is still doing reasonably well – but only just. You’ve plateaued in terms of sales; your people are just going through the motions and you’re still getting up at stupid o’clock in the morning to get everything done each day”.
“The bad news is that your profit margins have been falling and will soon be way too low for you to survive more than six months or so. If you’re not careful, the business could become technically insolvent in which case your limited liability would vanish and, as a director, you would have no protection from creditors if the business went bump.”
Stoke’s leading widget maker looked crestfallen. “Don’t worry, you are in good company” I told him – and went on to explain that the latest figures from the Insolvency Service revealed that the profitability of UK companies generally was on the slide. In fact, the net rate of return on capital employed for manufacturing companies fell to 13.9% in Quarter 2, down 0.6 percentage points from the previous quarter’s revised net rate of return of 14.5%.
“Falling profit margins are a common factor behind poor financial performance”, I told him.
Bill gazed out of the window to the factory roofs below which housed the machinery that, even now, was turning out highly popular but insufficiently profitable widgets.
“What do we do now, doc?”, he asked.
I smiled. “And that is exactly what we are going to talk about next. As a Business Doctor, I can offer you a free health check for your business and we can start putting things in place to get you back to full health”.
If YOU would like a free health check on your business (without the use of a Tricorder!), get in touch or simply request one and we’ll do the rest!
Full disclosure: we don’t actually have a Tricorder. We did have one, but I left it somewhere on the holodeck…