Welcome to our Case Study Of The Month, showcasing clients who have enlisted our help to turn their business around. This Case Study focuses on a small Sydney Gyprocking business. Across a four week period, we were able to restructure business with creditors recovering the true value of all assets while allowing the business to continue trading. Read how we made this happen.
A Background In Gyprocking
Gyprock is one of the world’s most popular plasterboard products with a reputation of high durability and quality. At its core is gypsum, a naturally occurring soft sulfate calcium sulfate dehydrate mineral, widely mined since the times of Ancient Egypt, and the main ingredient in plaster, blackboard chalk and wallboard. The final product of Gyprock is machine-made reinforced by a heavy-duty linerboard. Gyprock plasterboard is used as an internal lining board to provide smooth, long-lasting walls and ceilings for homes, offices, hospitals, shops, factories and more. It is a durable surface that accepts all types of decorative finishing, from paint to wallpaper and texture compounds. As a drywall plaster used for lining walls and creating partitions, gyprocking covers the installation of walls, ceilings, cornices, roses and other decorative plaster products.
Installation costs are influenced by
- the size of the job from one room versus an entire house
- whether old plaster needs to be removed and if it’s a tight space
- if ceilings are required, since ceilings are difficult to install
- the style and height of walls and ceilings
- whether windows are installed, as windows are difficult to work around
In New South Wales, separate licenses are required for both dry and wet plastering, with professional Gyprock installers trained in the product for a professional finish for smooth walls, ceilings and cornices ready for painting.
- Resourcing is tough, and innovation is important
- Technology shifts fast
- Bespoke designs require immense efforts
- Bureaucratic red tape and builders’ premiums are high
- Being environmentally responsible
- Industry skills shortage
The Financial Situation
This small gyprocking business came to My Business Path under pressure from a number of creditors, including the Australian Taxation Office. Owing around $160,000 to creditors overall, the ATO was specifically owed $110,000. The company's assets included a truck and tools of the trade. Should the company fold, both the business and the creditors stood to lose money, and while the sale of assets would have generated some money for the creditors, it would have been below the true value.
We devised a plan which saw creditors paid, and the company continue trading. My Business Path stepped in to assist the business during a four-week period. We had a registered valuer assess the business, including all assets and goodwill - which boosted the valuation - for their true market value. We set the client up with a new ACN and registered the new company for GST. The new ACN purchased the assets and goodwill from the old company for the true value at the registered valuer's valuation. This meant the creditors recovered the true value of the assets, the client continued trading and providing for his family while servicing his other creditors (especially the ATO). We worked closely with the company and put a new business structure in place to better meet the needs of his business and creditors, and also avoid returning to his previous difficult financial situation.
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