FGW Consultants Limited, FGW Corporate Recovery & Insolvency

By: Fgw  05/12/2011

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
  • Pricing
  • Customers
  • Advertising
  • Selling
  • 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.

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