A business viability review could be the best early present directors could treat themselves to
There’s a lot of highs and advantages for sure, otherwise not many people would use their skills, knowledge and experience to guide and grow their company.
But one thing every director would admit is that even if they were experienced and had already worked in management before, they probably aren’t prepared for the totality of everything becoming their responsibility – all at once!
Staffing, HR, marketing, IT, sales, advertising, research, development, customer service, customer relations, production, accounting and the hundreds of other duties, issues, opportunities and problems unique to each industry and trade will now ultimately be theirs to make a decision about or to at least know enough to take a position on.
And this is if they are a full time manager or director – many also have another day job within the company to do as well. Not everybody has the mindset and necessary soft skills such as resilience, endurance and patience.
This is just as valid for existing businesses and their owners as it is for new ones.
The unprecedented trading conditions we’ve seen in the past 18 months throughout the pandemic has meant that many directors and managers have taken on new duties and responsibilities that they might never have previously done before.
Because of the various changes to rules, working patterns and circumstances, some of these might become permanent adding even more to their already full plates.
So while they will be doing their best to keep them spinning on a daily basis, you can see how easy it is to take an eye off the biggest picture – how to run the business at a profit.
Given all of these unavoidable facts of business life, wouldn’t it be helpful to have an unbiased professional let you know if your company is on the right track before you dedicate even more time and mental bandwidth to keeping it there?
How useful would it be to be able to see, at a glance, what your main threats and problems are likely to be in the next 12 months so you can take action to avoid them before molehills become potential mountains?
A business viability review could be the answer to this and much more besides.
What is a business viability review and what does it cover?
Although it encompasses a lot of detail, the business viability review can be summed up in one sentence.
It’s a professional-led review that looks at how a company would perform on a day to day basis and how it would survive for the next 12 months based on cash flow and profit and loss forecasts.
It can be used as a roadmap for management of potential problems to avoid or as additional evidence about some hard decisions that may need to be taken now.
Although a stand-alone procedure, the review could also form part of a pre-pack administration. In this instance, it would demonstrate how the running of a company would differ from the previous management.
The new management team would clearly set out their aims and objectives and how they will look to achieve them, crucially demonstrating how they would run the company more efficiently than the previous incumbents.
The business viability review would then be able to highlight the strengths and weaknesses with the proposal in advance.
While the review isn’t legally binding, it does provide the most accurate prediction based on real information on how viable a business proposition is and whether a going concern can develop and thrive or if there are more serious concerns uncovered that have to be addressed.
Chris Horner, insolvency director with BusinessRescueExpert.co.uk said: “the most important thing any business owner or director needs is certainty.
“A business viability review can’t completely predict what’s going to happen but based on all the available evidence from the previous year, it will provide the most clear eyed projection that it’s possible to ascertain about a company’s likely performance.
“Additionally, the review will also highlight the likelihood of a business requiring additional funding within the next 12 months which we can also provide advice about.
“Depending on the purpose – invoice based financing, asset refinance, peer-to-peer funding, director’s loans or enterprise finance guarantees might be the most appropriate and suitable.
“Also, now winding up petitions can be brought again under certain circumstances, we can advise on how to handle problem debt that the review can identify or if the business has received a 21 days notice from a creditor seeking repayment.
“We can recommend the best ways of tackling it through informal arrangements or other insolvency procedures such as administration, a CVA or liquidation if there is no realistic chance of repaying the debts.
“A business viability review provides important and valuable insights for directors of any company no matter whether the results are reassuring or require action.”
12 months ago most business owners assumed that 2021 would be the year when life would begin to return to normal and they could dedicate their time to rebuilding their trade and paying down any debts they incurred during the pandemic such as bounce back loans.
Now 2022 looks like it will be the year when this happens, things might have got even harder for them in the meantime.
The time between now and the new year could be crucial for many companies but if they use it properly and work on a plan to deal with any outstanding financial issues, they can look forward to the Christmas period and start of the year with renewed confidence.
Our free initial consultation for business owners and directors will let them tell their story to one of our experienced, expert advisors who have worked with hundreds of companies previously in similar situations.
They will then work together to explore all available options then come up with the most efficient and effective action plan based on what the directors or owners want to do.