This commercial mechanical installation firm specialises in plumbing and heating services in tall buildings. Operating across Yorkshire and the North West, the eight-year old firm is on a high-growth trajectory. It turned to Prevail to help it manage that growth profitably and without stress.
“I was doing really well… and we were at risk of running out of money,” says Daitan Jackson, Founder and Managing Director at DRS Mechanical.
“In construction you can run out of money for all sorts of reasons, even when jobs are profitable. You can run out of money because you’re growing or you’ve got fast projects or you’ve got slow projects… It’s very stressful as a business owner,” adds Daitan. “The uncertainty and not having proper visibility was causing the most stress. It became a real mission for me not to have that problem again.”
A need for better financial visibility
Like many subcontractor business owners, Daitan is an engineer by trade. He was very operationally focused because that is his background and that’s where he felt most comfortable. However, he also knew that he needed better visibility of the financial management of his business.
“When you start to grow a business, the gaps start to become visible very quickly,” says Daitan. “You wear many hats. You become detached from what you do well. You end up doing a lot of other things – things you need to do to grow the business – but you don’t do them very well. There comes a time when you have to hire someone to do those jobs better than you.”
Working with Prevail Accountancy
While Daitan was comfortable with the commercial management of individual projects, he wanted extra support in the commercial management of the business as a whole. But that sort of expertise doesn’t come cheap.
Daitan explains, “Bringing someone in with the skills we needed as Finance Director would cost too much money; the business wasn’t big enough to support that kind of salary. So working with Prevail – having a Fractional Finance Director working part-time with us but who knows our business well – is ideal.”
He adds, “With Prevail, you’re ticking two boxes. You have an accountant looking after the accounts and you have a Finance Director managing the cash, innovation and project visibility.”
The engagement began with a systems and process audit
“When we began working with Prevail, we saw improvements right away,” says Daitan.
Following the Prevail Accountancy’s team thorough review of existing systems and processes as part of its new customer onboarding process, DRS Mechanical was able to remove an unnecessary process which saved the office manager time and ensured that reports were much more accurate.
“We were duplicating everything on spreadsheets,” admits Daitan. “It was time-consuming and introduced errors. And you only need to introduce one error for the reporting to go very wrong. What’s the point of a report if you can’t trust the information in it?”
“With Prevail’s help, in the first month we cut out that double data entry; everything goes straight into Xero. We’ve removed the double handling of the information. And now I can trust the reports.”
Digitalisation brings much-needed visibility
Like many small businesses, DRS Mechanical relied on spreadsheets when it began. However, it had gone past the point where those spreadsheets were delivering enough information to manage the business successfully.
“Prevail has helped us put the right digital processes in place, with a standard to follow,” says Daitan. “Prevail’s help to get that transition correct has been crucial support. There’s more than one way to do it. And you need to make sure you do it the right way.”
“The digital reporting gives me confidence in what I can do. As a small business owner, you need to make sure you don’t become a bottleneck in the business. Digitalisation gives me the visibility I need to let go of control to others in my team.”
Guaranteeing the “lifeblood of the business”
The new digital systems and processes are focused on delivering real-time visibility of cashflow and cashflow forecasts. Poor cashflow management is the most common reason for business failures in the construction sector.
“Cash is the lifeblood of the business,” says Daitan. “What Prevail has given us is a better way to see, understand and manage our cashflow.”
The practical outcome of this? When one of DRS Mechanical’s projects required rapid acceleration, Daitan had the information to know he was ready and could profitably manage the increase in pace.
Delivering Lumina Park five months ahead of schedule
“One of the first projects we managed with Prevail was Lumina Village in Manchester,” advises Daitan. “Our client was very fast and we had to accelerate our programme – which can quickly get out of hand.”
A typical market run rate is ten apartments per week. Lumina Park was programmed to be 20. When the client asked for the project to be accelerated, the run rate increased further – hitting 40 apartments per week at its peak.
“When you’ve got a project that accelerates at a fast pace, it puts a lot of pressure on the site team, the cashflow and the business,” acknowledges Daitan.
“A few years ago, that would have absolutely filled up our capacity. But we have all the systems in place to manage on a weekly, monthly basis. We are managing risk and opportunities all the time. We were able to finish five months early, with high-quality work. Instead of crippling us, it actually benefitted the business because we generated more revenue in a shorter space of time.”
The Fractional FD model is ideal for construction SMEs
Daitan says the DRS Mechanical team is happy to recommend Prevail Accountancy – and already has.
“You can’t leave it and do your accounts and reporting once a year. It’s too late to solve bad problems and it’s too late to solve good problems,” emphasises Daitan.
“Every business needs this monthly reporting and real-time visibility, but you have to get to a position before you can afford it. That’s what makes Prevail’s service as a Fractional FD so right for us. They are not in the business every day; they don’t need to be in the business every day. But there’s enough attention to detail to help our business scale and grow.”
DRS Mechanical will double its turnover this year and is opening new offices in Leeds. The small team has the confidence it can continue to grow profitably.
Daitan concludes, “It can be hard to let go. But you soon realise when you hand that baton onto Prevail and they do the job a lot better than you, that it’s the best decision you could make.”