How a professional practice turned a €50,000 loss into €250,000 profit

The starting point

This partner-led professional practice worked in residential and commercial building design and fit-out. Based in Dublin and serving Leinster, it was generating approximately €1 million in annual sales and recording a net loss of around €50,000.

The relationship began in 2021 when the partners asked Tommy to value a potential acquisition.

The advisory approach

1. 01

   Independent advice on the acquisition

   Tommy assessed the proposed acquisition and recommended that it should not proceed. The partners followed that recommendation.

2. 02

   A structured programme

   The practice then implemented the Net Profit Planning Programme, covering management development, sales and marketing, financial management, and business planning and control.

3. 03

   Management and people

   Tommy established a board of management and became Chairperson. He set the agenda, chaired monthly meetings, challenged the management team and helped recruit senior staff.

4. 04

   Margin as well as sales

   Gross profit margin stayed central. The objective was a practice that turned more of its sales into gross and net profit, not just a larger one.

What changed

Annual sales increased from approximately €1 million to approximately €2 million. Gross profit margin rose from 50% to 60%, while the practice moved from a net loss of around €50,000 to a net profit of around €250,000.

The acquisition did not take place, but the existing practice became larger and more profitable during the advisory engagement.

A loss-making practice looking at a deal

The practice was turning over around €1 million but losing about €50,000 a year. The partners came to Tommy to value a potential acquisition. Buying another business can look like a quick route to scale, but if the core business is losing money, an acquisition can add risk rather than solve the problem.

Independent advice, even when it means no deal

Tommy assessed the proposed acquisition and recommended that it should not proceed. The partners followed that advice. An adviser who is paid to help complete a deal has a reason to say yes. Good advice sometimes means saying no and explaining why.

Fixing the business already in place

The Net Profit Planning Programme is the structured approach Business Answers uses with owner-managed companies. It covers management development, sales and marketing, financial management, and business planning and control, so that growth is planned rather than left to chance.

Tommy set up and chaired a board of management, ran monthly meetings that challenged the management team, and helped recruit senior staff. Gross profit margin stayed central throughout. The aim was a practice that turned more of its fees into profit, not simply a busier one.

The result

Sales doubled and margin rose by 10 percentage points. Because more of each euro was kept, the improvement in net profit was much larger than the growth in sales, moving the practice from a loss to a healthy profit without the acquisition.

What Irish owner-managers can take from this

Before you buy growth, make sure your own business makes money. Independent advice on a deal is worth most when it is willing to tell you not to do it.

Frequently asked questions

Is buying another business a good way to grow?

Only when the core business is profitable. A business that is losing money usually adds risk when it acquires, not scale. Tommy valued a proposed acquisition here, recommended against it, and the partners grew sales from about €1 million to about €2 million by improving the practice they already had.

How does a business move from a loss to a profit?

Gross margin and cost discipline are the two levers that matter most. This practice lifted gross margin from 50% to 60%, so a net loss of around €50,000 became a net profit of around €250,000 — an improvement far larger than the doubling of sales alone would suggest.

Why does independent advice sometimes say no?

An adviser paid to help complete a deal has a reason to say yes. Good advice means being willing to recommend against a deal and explain why. That recommendation protected this practice from buying growth it could not support.

What is the difference between growing sales and growing profit?

Sales measure volume; profit measures what is left. Because more of each euro was kept after direct costs, the profit improvement here was many times the size of the sales growth.

What does gross profit margin mean in a professional practice?

It is the share of fees left after the direct cost of delivering the work. Moving from 50% to 60% meant keeping an extra ten cent from every euro billed, which is what turned the loss into profit.