Identify the current Business Model
In many cases the difficulties facing a Company can be quickly determined by understanding the business model of the company.
Identifying a business on the brink of collapse
There are a number of common issues which may lead a company into trading difficulty, and, if left untreated, could result in a company becoming insolvent.
- Ineffective Management
- Directors dispute
- Poor finance, marketing, production management
- Inadequate succession planning
- Over reliance on one customer/product/person
- Inadequate product development
- Poor working capital
- Unanticipated events such as litigation, accidental damage such as fire or terrorism
- Bad debts management
After identifying the contributing factors to the business current situation, the next stage is to assess if the business is viable.
Assessment of Business Viability
Indicators of a business with a going concern are as follows:
- Continuous orders
- Adequate production facilities
- Strong line of credit
- Good banking relationship
- Strong goodwill and customer feed back
- Identifiable market position
Indicators of a non viable business are as follows:
- Industry over capacity
- Non competitive pricing
- Poor customer feedback and demand
- High fixed cost base
- Long term loss making contracts
In assessing the ongoing viability of a business, we carry out a profitability analysis of each Company’s product line or service line, combined with a profitability analysis of the Company’s customer base.
Devising a Recovery Strategy
In order to develop a recovery strategy it is necessary to identify whether the business needs to create a new angle in it corporate image, or, develop a more efficient way of doing business.
It can often be the case were the business needs to develop a combined strategy;
- Entry into a new market
- Withdrawal from a new market
- Adding or deleting particular products
- Adding or deleting particular customers
- Changing the mix of products made
- Changing the mix of customers
We pay particular attention to the components of a Company’s marketing strategy, which includes:
- Product range
- Distribution channels
In some cases it may be necessary to re-organize a Company’s financing structure. Options include invoice discounting, installment arrangements with the Revenue, leasing assets etc.