Case Study 3 – Succession Issues

A company had been established for over 10 years and had grown to a turnover in excess of £5m. The accounts team was led by an experienced accountant who had informed the company that they were planning to retire on a specific date.

We were asked to review the existing structure, processes and staffing and to advise how best to deal with succession.

At an initial meeting with the senior management team we discussed the company’s current business conditions and strategy for the future. This gave an understanding of specific skills that would be needed in the business.

The next phase was to interview each member of the finance team to gain their perspective on the business and the finance function, and a meeting with the IT Manager to understand their systems.

We reviewed the processes for producing management information and forecasts, then looked in detail at how individual processes such as debt collection, invoicing and cost management were conducted.

We then re-convened with the senior management team and explained our observations and recommendations. We considered two fundamental options:

1) to recruit a Finance Director who would join the senior management team and also oversee day-to-day accounting operations

2) to recruit a new Financial Controller who would manage the accounting function, while a part time FD would be used as and when needed on a totally flexible basis for high level tasks

The company decided to choose option 2, not only because it saved around £30,000 per annum, but also to avoid changing the main dynamics of the senior management team. We helped to produce a job specification, assisted with the interview process and are available to the company as and when they want to use higher-level services.

Case Study 2 – Acquisition

A retail / service business had been running for around 5 years from rented light industrial premises and had achieved profitable growth and positive cashflow.

An opportunity came up where a competitor was closing down and selling their freehold premises, which were also in a more attractive location.

Working with the Managing Director, we prepared business forecasts for the business trading from the new location and allowed for some increase in trade from acquiring some of the closing company’s customer base. We then prepared 5 year cash forecasts and a full business plan which was submitted to Barclays Bank. This allowed for the purchase of the site, costs of transferring the business, and an expansion of working capital to service the expected increase in turnover.

Barclays approved the lending and the new site was successfully acquired.

The company thrived in its new location, business increased in line with expectations and the cashflow performed within forecast.

Do not believe those who say banks are not lending money, they will lend to companies with credible business plans provided that there is sufficient security. The are also other lending sources that may lend for projects that do not meet the banks’ criteria.

Case Study 1 – Funding for Growth

A specialist business services company had identified that it was sub-contracting large amounts of work to another company, which gave it two strategic concerns:

1) potential over-reliance on that one supplier

2) an opportunity to increase the scope of their business activities and make increased profits

Many businesses identify these sorts of issues but they often remain as theoretical concerns. The company then learned that this supplier was considering withdrawing from that area of business and saw both an opportunity and a need to act.

Having identified a couple of key individuals with experience in that specific business activity, they formed a new company and contacted us for our advice.

The management were very good instinctive businessmen, with a good understanding of their industry, reguilations, contracts and negotiations, but they identified a need for help with business planning.

We took their business forecasts and developed a full three-year financial model including daily cashflow modelling to identify peak funding requirements. We then met and discussed sensitivities, running up different scenarios live on screen for variables such as business levels and customer payment performance. The directors quickly developed a good understanding of the likely needs of the business as a range of possible outcomes, and were able to arrange finance from within their existing personal and business assets.

Sometimes you can fund growth from existing sources, or you may need to go to external sources such as banks. We can help you identify what you need and where you may be able to find it.

Voluntary work update

Nick is now working with his first applicant under the government’s Start-Up Loans Scheme.  It’s very refreshing to see the drive and determination of someone who has a strong urge to set up their first business.