What are the benefits of conducting a full strategic and financial review of our business?
Businesses are most likely to undergo a full strategic and financial review when they are in difficulties, or when a new management team has been brought in, or prior to a sale, explains AlixPartners director Dan Murphy.
However, as with MOTs or regular dental check-ups, Murphy believes that a business review is worth undertaking more regularly, and it can be cost-effective to do so.
“Most management teams are not experienced in looking for signs of future trouble, and so it is worth bringing in someone who is experienced in recognising these signs of financial stress, in the same way that we get someone in each year to check over our central heating system,” says Murphy.
He adds: “If a business allows the financial position to become so stressed that their banks requests an Independent Business Review (IBR), then the detailed work can become significant, both in terms of the time it takes and, of course, the cost.”
By comparison, regular check-ups of a retailer’s financial and operational health can be done quite quickly, and without having to provide extensive reports for credit committees. By doing this, a business can proactively manage any potential issues such as cash flow or net working capital before they become more problematic.
Having such regular reports to show to key stakeholders - such as finance providers and supplier credit insurers - can also improve their confidence in your business.
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