Mindset over VAT and pricing
Kitchen fitters come HMO Conversions
10 staff – £900k turnover
This particular client came to us looking for more help from an accountant. They felt they had good support but had started to question things when the advice they received was to hold the company back and avoid registering for VAT. This wasn’t helpful as they knew they had many happy customers and lots of enquiries and felt ready to grow and scale.
Having expressed their desires and concerns to their accountant at the time and still only received an answer of ‘if you think that it’s best to be VAT registered, then go ahead’ they felt they needed more help.
Becoming VAT registered was scary as they had been there before, and it almost caused the business to collapse. In their opinion customers didn’t understand VAT and thought it was almost an optional amount to pay. However, many businesses had grown past this stage in the past and gone on to be successful so it must be achievable.
They came to us explaining where they are now and where they wanted to go. We could see how concerned they were and explained how to price and pitch to potential customers in a way that would be seen as positive.
They decided to come on board and let us help them move forward in the right way. At this point the business was around £160k turnover with just the 2 directors and 1 staff member and profits were very limited. Certainly, the directors could probably earn more by getting an employed job.
We focused on building systems for the business using Xero and Receipt Bank and utilising Xero Projects to accurately record costs against particular jobs.
With the new focus on the value they would deliver as opposed to cost they started winning larger contracts and found themselves developing a series of HMO conversions for a client. This has now become somewhat of a speciality and they have built a team to deliver such projects time and again. Turnover has grown to over £900k and staff to 10 with profits being far higher for the directs than they could ever earn being employed.