Leading Marketing Agency Plans for Growth with Float
The Marketing Eye is a successful marketing agency that was ready for its next phase of growth.
Demand for its services was increasing and the current role of the Managing Director needed to be split between the day-to-day management of the business and the continued exploitation of strategic growth opportunities. More investment was also needed in the technical delivery team, requiring scenario planning. That’s where Float came in.
By 2016, The Marketing Eye was ready for its next phase of growth, but the company’s structure was hindering its efforts. It was clear that Neil, who acted as Managing Director, was being pulled in too many directions and that his role needed to be split. With demand for services increasing, Marketing Eye also had to appoint more people to the technical delivery team, or risk losing out on business.
Sounds like a headache, right?
Could the business afford another Managing Director, or service increasing business levels? The impact on cash flow had to be understood, and quickly.
How Float helped
Marketing Eye’s owners had used Float for about 18 months to manage their operating cash flow, after their financial controller pointed out the advantages of using Float instead of clunky, never current spreadsheets.
Now, the owners could model a variety of cash flow scenarios around their new appointments and investment, including what the cash position would look like if everything went to plan, but also, what would happen if sales dipped.
Unlike in their old cash flow spreadsheets, the new scenarios created in Float could be compared with the existing baseline, so they could visually see if the risk of the new investment was worth it and how soon their working capital would come under pressure.
The business case was developed over a period of several weeks, and, because the starting point of the forecast was always based on real-time information from Xero, it didn’t have to be updated every time it was re-visited.
The clear visualisation of the data enabled the owners to see where the pressure points would occur and where things didn’t look quite right in their forecasts, allowing them to look again at the underlying data. The result was a realistic set of forecasts that all stakeholders were satisfied with.
Neil Edwards, Managing Director said: “Before adopting Float, we used spreadsheets, and I wince now at the amount of time we spent trying to update a spreadsheet before we could be comfortable with it.
“We have always monitored cash flow because it is crucial to running our business. We had used Float for about 18 months, but this was the first significant investment we had considered and having the ability to model different scenarios relatively quickly was invaluable. This forced us to be honest with ourselves and not allow over-optimism to get in the way of our decision making.
“When conversations were opened with our bank, it was extremely helpful to be able to insert detailed cash flow forecasts into our management information pack”.
What the future holds
The growth programme will allow The Marketing Eye to realise its full potential by taking on more work, recruiting the best marketers and extending its reach into new markets.
Neil added: “We are energised and positive about the future, but no matter how things turn out, we will always keep a close eye on cash flow. Float allows us to keep on top of our cash situation and anticipate any problems that might be ahead of us. We can then take the necessary action in a measured way.”