The principles of sound business management are always relevant, regardless of whether the economy is growing or in recession. However, the need for improvement or change is usually only highlighted when adverse factors impact on business performance.
The world-wide economic slowdown, high domestic interest rates and a strong New Zealand dollar have focused media attention on an ‘impending’ market downturn. The extent of this downturn in the short to medium term is unknown.
Our experience has shown that times of economic difficulty do not always equate to periods of business failure. In fact, for businesses with sound operating models, there are prime opportunities to not only survive the downturn but also to prosper and ‘leapfrog the pack’.
What the Private Client Services team from PricewaterhouseCoopers (PwC) can offer you is a method of evaluating the health of your business, and offering solutions and advice on ways to improve performance in areas that may suffer in the tighter economic times.
Our exposure to the current issues being experienced across our client portfolio give us an unique opportunity and advantage in evaluating the ramifications of the market conditions, and assessing areas of strength and weakness within your business.
The key steps are to review your business, cut unnecessary cost and realise opportunities as they arise. We have identified ten key questions to consider:
- Does your business have a strategy?
- Is the management information you use to make decisions accurate, timely and actually what you need?
- Does your business have sufficient cash flow and are you aware of your future cash requirements?
- Can your business avoid large write-offs if sales fall?
- Do you have an effective policy for debtors and are you rigorously applying it?
- Are you maximising your payment terms with creditors?
- Is your business doing all it can to minimise the cost of debt?
- Is capital expenditure still economically viable after allowing for increased external funding costs?
- Do you focus on your business and improving its profitability?
- Are you taking advantage of tax planning opportunities?
If you answered no to some of the questions above, or envision any of these issues becoming a problem for your business in the future, then we would love to talk to you before the problem becomes a hill too steep to climb.
So what can we do to help?
The Clever Company Check-up is our method of evaluating the financial and operational health of your business. We have a number of questions that provide us with an in-depth independent perspective of the strengths and weaknesses of your business.
The results of the Clever Companies Check-up then become a reference document and can be used as a basis of consolidation or growth.
Findings we typically encounter are:
- The strategy doesn’t accommodate a down turn in the market
- The credit control and debtor policy are inadequate or not enforced consistently opening up the business to the risk of voidable transactions on debtor liquidation
- Forecasting and budgeting are not done effectively therefore the business does not know what the cash requirements are going to be in the future
- Management information is not specific or timely enough to make meaningful decisions
- Governance and internal control procedures aren’t in place to mitigate the risk of theft or fraud
- Tax planning hasn’t been considered in light of the changing market
- Cost reduction isn’t a primary focus of the business.
If you would like to discuss our Clever Company Check-up (or any of the other information included above) contact your PwC representative. Our team can help ensure that your business not only survives but prospers in any economic situation.
