For many Australian businesses 2016 has not been a good year, with some large and very well-known retail names going into liquidation. Masters hardware chain, Dick Smith and now Payless Shoes have shed thousands of jobs and left premises empty, with Dick Smith only surviving as an online store.
Small Businesses Need Outside Help
A well-known business publication, when discussing the various reasons for the demise of many businesses, noted that poor decision making and unsustainable levels of debt were the causes in many of the cases they had reviewed. If large businesses employing professional and experienced managers and accountants can get these things so wrong, what hope is there for small businesses without these internal resources?
We believe there is a lot of hope when owners and managers are prepared to seek professional external assistance. There are many techniques available to analyse a business and identify improvement opportunities. At Charter Partners, we offer a business health check that pinpoints underperforming areas, then we follow that up with methods to improve operational results.
Suggested Timeframes for a Business Health Check
Such a comprehensive health check provides masses of data, not just about the business but about the industry in which it operates, its competitors and the current market conditions. This should be done annually, or at least in a timeframe that allows management to implement our recommendations.
Operational cycles vary depending on the industry involved. Repeating the health check too soon could result in a “paralysis by analysis” scenario where personnel spend most of their day gathering data instead of pleasing their customers. A too infrequent spotlight on overall business health may see improved processes falter before they have become embedded in organisational culture.
Score Card Allows Comparisons with the Competition
Our detailed financial score card is one of the most important pieces of information we can provide. This shows where your business sits against the competition, and gives you a benchmark from which to launch new strategies to increase market share. Identifying the key financial drivers of your business and providing an impartial interpretation of the elements is another important factor.
“What If” Scenarios Provide More Certainty in Decision-Making
The “what if” scenarios we provide about these key drivers are also very important. They allow management to test decisions to see the likely outcomes without committing financial resources. This will result in better decisions with a higher likelihood of success than trying something new and hoping for the best.
Keep an Eye on Debt
Given the dangers of taking on debt without proper analysis of the effect, our debt reduction guide is also another important tool we use in the business health check process. It all depends on the type of business and its current state of health.