Reviving your business for the year ahead

If you’ve managed to keep your business going over the past 18 months, congratulations! It’s been a tough run for many of us.

Now that trading is returning to ‘normal’, you may be faced with one or more of these challenges:

• Lower sales putting pressure on your business’s profit and cashflow.
• There isn’t enough cash to reopen and get the business running again.
• You have debts, which accumulated during lockdowns, that you can’t pay in full.

FINDING A WAY FORWARD

The good news is, if your business is facing these challenges – but you believe its future is positive, there are several options available to put it in a better position by stabilising cashflow, improving profitability, and/or reducing debts to a manageable level. These options generally fit into three areas:

1. Turnaround
2. Restructuring
3. Selling

The right solution for your business may be just one of these or a combination. Whatever the approach, the key to getting the best results is prompt action.

A CLOSER LOOK AT THE OPTIONS

1. Turnaround: If you’re managing reasonably well but things are still tough, turnaround measures can help improve sales, reduce expenses and increase profitability. You can identify and implement these changes yourself, in conjunction with your accountant, or by engaging a professional turnaround advisor. Looking at your cashflow cycle can relieve day-to-day pressure to find money for payments as well. This involves reviewing your process from invoicing to payment, and then when you pay your expenses. It can seem obvious, but it’s astounding the cash tied up in business processes, regardless of the size of a business. Additional finance may also help relieve short-term cashflow challenges and allow you to focus on making the best decisions for the future of your business.
2. Restructuring: When it comes to restructuring, the focus is on getting breathing space and seeking to reduce debts to a manageable level. Options are available to sole traders and companies alike, including the newly introduced small business restructuring process for companies. It’s best to seek guidance on these options from a restructuring or insolvency specialist.
3. Selling: Your business may have a positive future, but you may not have the money or energy to restore it to its best. In this case, handing over to a new owner may be the preferred outcome to take it forward.

SELLING: BE REALISTIC AND FOCUS ON THE BENEFITS

Although you may have expected to receive hundreds of thousands of dollars for your business at some point in the past, this may not be currently achievable. If your numbers are down, or pressures on the business limit the window available to complete a sale, the price may not be where you hoped it would. It’s important, however, to remain focused on the benefits of selling, which can include: • Achieving a sale price

• Allowing the brand you’ve built to continue
• Continuing the business’s relationships with customers and suppliers
• Paying out loans, suppliers, rent and tax debts
• Retaining jobs for your staff
• Assigning finance agreements and premises leases, reducing director liability under personal guarantees.

It’s important to be realistic about your expectations from buyers. They’re coming into a business with numbers that may need some love and money to get back on track, and they may not have the benefit of an extensive due diligence period.

BUYERS: THEY’RE OUT THERE

If you’re thinking of selling, get started today. If you’re confident in finding a buyer and negotiating a deal yourself, your management, competitors, suppliers or customers can be the best place to start. However, if you’re not sure where to begin or there’s pressure on your business, a business broker can bring a number of benefits to the process. They have a list of potential buyers, and can present information clearly, confidentially and beneficially which generally takes the stress off you.

SELLING UNDER PRESSURE

If there’s time pressure on your business – dwindling sales, tight cash or the desire to get out as soon as possible – you need a proactive approach. Such circumstances call for a business broker and possibly a restructuring and insolvency specialist working together to find a buyer and negotiate a sale. Various options are available to sell the business before, during or even after a restructuring or insolvency appointment. Early action always helps to achieve the best outcome in the circumstances. If the sale price achieved doesn’t pay out business debts in full, an insolvency appointment can deal with the remaining debts