Company Outline

Already an established and successful CrossFit gym located on the outskirts of London. With an established and loyal membership base and good personal training business it was time to re-locate and move to the next level of business practice and improve professionalism.

The business has two owners and is fiercely independent in their aspirations for growth.

Turnover: £375k
Number of staff: 6
Net profitability: 40%

Situation

As one of the early CrossFit gyms established in the country the business had experienced a lot in the growth of CrossFit as a business model and the market in third-party services that had grown to support it.

The business was frustrated with the lack of any third-party service to provide anything but the basics in analytics and reporting to help improve the business and needed a system to gain deeper insight in its operations. Although developing basic tools to help reporting there were still no real-time reporting on financial activity. While sales were being supported through significant man-hours by the owners into a manual system. Although with a good structure to its service offerings, understanding and analysing them was poor.

Using traditional accountancy services meant late delivery of vital information cash-flow, payroll, and delivering owner benefits. The delivery of year end accounts although only around three months after actual year-end was not felt adequate or allowed time to plan budgets.

The business had just moved into the flat-rate VAT scheme. It was predicted that the move to standard rate VAT was going to be soon and needed to be planned for.

Owner benefit was fair but not good. The owners felt there was a vital need to improve efficiencies and increase profit margins to create a better return for the owners.

Solution

Using the already successful financial structure and a move to Xero online accountancy software enabled the creation of custom management information reporting system to improve time-lag in vital business data and the man-hours involved in it.

Full bookkeeping and payroll services were introduced, again reducing man-hours.

With this in place a clear process of tasks and deliverable dates created a structure and the ability to delegate while retaining confidence in the results.

Live tax commitment reporting now ensured early payments and generated interest-based rebates from HMRC.

VAT schemes when implemented were done through absorption into buffers and retained profits to minimise impact upon service rates until annual subscription increases.

Finally, an introduction of budgeted profit and therefore dividend allocations, reinvestment and shareholder dividends were now allocated and maximised for both business and shareholder benefit.

The business continues each year with improved growth and owner benefit resulting in doubling of revenue and a four-fold increase in owner benefit.

Challenges

The business had determination, and goals were aligned with the systems introduced from the start. Therefore, there were minimal challenges to achieving the transition.

Receiving relevant information and documentation from previous accountants proved delaying to the process. This led to the developing of an additional set of tools to aid this part of the process.

Benefits

Weekly reviews of real-time management information reports have allowed intelligent decisions based upon fact resulting in operational improvements. Revenue and profit have increased, and expenses have been reduced. The bottom line has grown against revenue.

Each quarter shareholders have received improved profit dividends at the same time as the business building a retained profit buffer and monthly cost-centre buffers.

All tax commitments are now dealt with withing two weeks. In the case of corporation tax this result in an interest refund every year.

Products & Services Used

Book-keeping
Payroll and Pensions
Management Information Reporting
VAT
Year End Accounts
Company Taxation
P11D