UK-BASED GCA Ltd is a firm of consulting civil, structural, highway and transportation engineers. The company has a payroll of 22 and has expanded into niche markets, increasing pre-tax profits by 55 per cent. Managing director Paul McCormick tells how this improvement was achieved.

Targeting higher paying clients: 1. Take financial control
"When I joined GCA four years ago, the company had plenty of work and customer feedback was excellent, but there was little financial control. Poor cash flow meant that we were running an overdraft, borrowing unnecessarily and had made a loss for the previous four years.

"Financial management is definitely the place to start when you're seeking to increase profits - there's no point doing anything else until you've got costs and cash flow under control. With help from Business Link, we devised a plan to reduce our borrowing, eliminate our overdraft and implement rigorous financial management procedures. We also changed several of our suppliers, for example saving £15,000 on insurance."

Targeting higher paying clients: 2. Do the research
"Once we had finances sorted, we set about researching the engineering market with a view to growing the business - at the time, we positioned ourselves as structural engineers only.

“The objective was to add services that utilized our existing skills pool, while offering customers a one-stop-shop that would allow us to take on larger projects, as well as attract new customers.

"Through a mix of competitive analysis, customer consultation and instinct, we decided to focus on transport and highways. Structural engineering is extremely competitive with margins of just 3 to 4 per cent, whereas niche services like highways engineering pay between £10 and £40 more per hour - even though exactly the same person does the work, using exactly the same skills!

“We put together a marketing plan to launch the new services, produced new sales materials to support them and advertised them online using Google AdWords, which has proved highly successful."

Targeting higher paying clients: 3. Review profitability
"The initial momentum can soon wear off, so it's been important to have systems in place that encourage us to regularly review our profitability. We include profit and loss accounts in our monthly management meetings and cascade the findings down to all staff, encouraging feedback and ideas. We've also expanded in-house training provision to keep a stream of talent flowing through the company as we grow.

"The figures speak for themselves - our profits were up 55 per cent last year and are now two to three times the industry average, with the new services already accounting for 30 per cent of profit overall."

TARGETING HIGHER PAYING CLIENT TOP TIP
Consider share options. Success will mean other companies will try to poach your staff. Explore ways to lock in key staff, such as share options.

This case study was sourced by UK government-funded advisory body Businesslink, a free business advice and support service.

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