Bob was an apprentice baker in a regional town and had just become a tradesman; he longed for his own business. He was married with two children and a nice house in a nice part of town. Bob decided to go into business and found an old petrol station on the main road that was for lease. He took the lease and borrowed money from the bank against his house to get started. The money was used to buy the bakery equipment and fit out the shop.
Bob’s Bakery was an overnight success and he became a local celebrity (local lad does good etc). Bob bought two new cars and paid for them with cash. Soon Bob’s bakery was at capacity and he wanted a second store so he found one in a local shopping mall and he took the lease with a further loan from the bank to buy the equipment. The second store was nowhere near as good as the first and he found himself stretched between two stores which caused the performance of the first store to drop. There were many problems with quality, wastage, employee issues and eventually the cash ran out and Bob was in trouble. Bob did not have any systems in place and did not produce monthly financial reports to measure the performance of the business; nor did he have a clear understanding of the correct way to cost products to make a profit. Bob’s business turned over almost $2m per year and due to his lack of business experience he had taken it to the brink of bankruptcy. This caused Bob and his wife huge stress and they did not know what to do. Bob called ThextonDODD Consulting.
The consultant suggested that immediate action be taken to avoid the losses of the business and his house, and that Bob appoint ThextonDODD Consulting as the business consultancy for Bob’s Bakery. The consultant proposed that the Business Success Programme be delayed for a few weeks to concentrate on the very urgent financial issues at hand:
- Immediate upgrade of the handling and control of cash within the business.
- Immediate stock take and establishment of the exact financial position of the business.
- Visit to the bank to meet the manager and outline the Business Success Programme and the plan to
improve the business.
- Sale of both cars to release cash into the business.
- Meetings with major creditors to enlist support and to outline future plans of the business.