How a small property maintenance business grew 50% per year for 5 years, becoming a successful 3 state operation…
Situation
The business provided Property maintenance and remediation services to real estate agents and landlords. Their services included regular inspections and, when required, remediation of any on-site problems.
They had a business with three different stakeholders. The first stakeholder group was the real estate agents and landlords that authorised the work and took care of the payments. The second stakeholder was the tenant – the person who gave access to the property and agreed when the work could be carried out. A third, background stakeholder was the property landlord – the owner.
Problem
Due to the complexities of dealing with three stakeholders, the payment process was often slowed. Both the property manager of the real estate agents AND the landlord were required to authorise payments. Frequently the landlord requested that payment for the service would come from the following month’s rent, as many landlords were small, one property investors with mortgage payments to meet on their investment properties.
The rapidly growing and expanding business was capable of undertaking the work. However, they did not have the working capital to sustain their planned growth.
Most of the capital they needed was tied up in their debtors. This was further complicated by volume – as the average debtor was small, many under $1,000.00. This required an efficient administration system that could manage the large volume of accounts.
Solution
A business consultant who was assisting the business in improving systems and planning approached Martin Cattach from Finance for Business, to review the current business and recommend a funding solution.
Martin proposed an invoice/debtor finance facility that could be structured using the large volume and small value of the invoices.
As the business had very efficient processes and software in use, it was possible to implement a finance facility that used the invoices for security and provided the business with the working capital to grow.
Results
Since implementing the finance facility that increased their liquidity, the business has been growing by more than 50% a year for the last five years AND has expanded into three states.
This is a classic example of how the right funding, systems and software can help business owners build the business of their dreams – even in complex situations.
