With 30 June having just passed, most business owners and directors minds turn to the preparation of tax returns and annual accounts.
Whilst these important and necessary requirements must be complied with, they are by nature a retrospective, historical analysis of a business.
There is nothing that can be done to change or influence past trading performance. However, action can be taken to influence the future success of a business.
Thus, 30 June should also be a time to “take stock” of a business.
The importance of conducting a review at least annually would be appreciated by most business operators. But in uncertain economic times, it is vital!
There is commonality in much of what economic commentators are saying and actual events and the statistics are supporting – a more difficult economic environment currently exists, under significant pressure from such things as:-
- Record levels of consumer and housing debt
- Downward trend for housing prices (particularly units), across the country
- Volatile Australian dollar
- High current account deficit
- Widespread drought conditions leading to lower production
- High oil/fuel prices
- Low unemployment, leading to skills shortages and wages pressure
Whilst we are already seeing some signs of a slowing economy, such as reduced retail spending and falling property prices, the pressure of the above factors raises the eerie spectre of two things that most average Australians understand – higher inflation and upward pressure on interest rates.
We are also seeing significant structural change and the effects of globalisation in particular industries.
Certain businesses and industries are at higher risk in such an environment, and in particular those that have much of their inputs or costs in:-
- People & wages
- Imported inputs and materials
- Commodities and food stuffs
- Transport & distribution
- Oil based products, such as plastics
Similarly, business sectors would be at greater risks which are:-
- Highly geared
- Dependent on discretionary consumer spending
- Particularly sensitive to movements in interest rates, such as housing and construction
- Vulnerable to competition from imports
Businesses should analyse their operations and formulate and implement strategies to “future proof” their businesses now.
Time is critical in these matters. Early detection and intervention is the key to future survival and prosperity.
We recommend that at the same time as businesses are consulting their accountants and advisors to prepare their tax returns and annual accounts, they also consider the future.
To assist, we have developed a high level summary, “20/20” Business Health Check, which will be included in our next Blog post.
The “20/20” Business Health Check consists of a number of simple questions assessing various factors affecting short, medium and long term prospects of a business, analysing in more detail critical success factors, common areas of vulnerability and warning signs of failure.
Also accompanying the Health Check will be a “Business Turnaround Decision Chart”. The chart assists businesses, which identify problems through conducting our Health Check review, to determine whether they acquire formal assistance and “breathing space” to do so.
Robson Cotter are experienced in assisting businesses and individuals assess both their current position and the possible effects of change on the future of a business. We are specialists in helping to restructure, refinance and provide protection strategies for businesses and owners going forward. We also provide the mechanisms for dealing with unmanageable accumulated debt, which is sometimes required, to ‘clean the decks’. We work closely with existing professional advisers, such as accountants and lawyers, and provide pragmatic, value added solutions, which maximise the chances of business survival and future prosperity.
If your review reveals your business or your clients are “at risk”, we are happy to provide a confidential, obligation free, consultation to review and discuss the issues faced.
Contact us at any time for a no cost and no obligation chat…