Business health checks: Grasp your goals
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Jim McAuley, Royal Bank of Scotland, offers practical tips on completing a business health check. Q: What should I be doing to ensure my business is well placed to come out of the downturn successfully. What options and support is available? The experience of the recession and continued economic uncertainty means it is more important than ever to have a firm grasp of your business goals and consider regular ‘health checks’ to review your profitability and access to working capital. First revisit your business plan. Ensure that you have a clear picture of what is happening to your company at present. Be honest and be prepared to ask some tough questions. Have a “plan B” in case events take a different turn – be it funding options; alternative suppliers; different routes to market, and reviewing your management team. Have you got a robust financial model in place? In order to make informed decisions – you need to be able to stress test your business. Ensure you know your exact break-even point and examine the impact of lower prices and narrowing margins. Can you reduce stock levels? Can you renegotiate contract or payment term? Can you improve your credit control? Less conventional types of finance such as invoice discounting can provide an ongoing stimulus to cash flow. Don’t assume you have to tackle everything on your own because there is an abundance of information out there from banks to accountants. If you work in partnership with your chosen financial professional they will gain a true understanding of your business and can often use their expertise and commercial acumen to deliver simple and effective solutions. You should also take advantage of the free information offered by public sector bodies to explore the range of public sector finance available for your business. Many business reviews can result in the reduction of non essential expenditure and you can save costs by cutting non core activities. But don’t make any harsh decisions before fully reviewing your whole business plan. Marketing and Training for example are often cut but are an important asset for your business to help maintain relationships and making sure your employees continue to be trained properly. The key here is to evaluate the effectiveness of your marketing or training channels for example and don’t be afraid to explore alternatives or negotiate on costs. For more information on how RBS can support your business visit www.rbs.co.uk/business Security may be required. Product fees may apply. Over 18s only ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE
REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT
The Royal Bank of Scotland plc. Invoice Finance is provided by R B S Invoice Finance, part of The Royal Bank of Scotland Group, |
