4 Ways Business Evaluation Can Assist Struggling Businesses

No business owner wants to find themselves in a position where they are failing to turn over a profit or are finding it difficult to meet ongoing costs. Once here, it can sometimes seem near impossible to turn a business back around and regain financial control.

If you are in this situation, it is best to seek out the advice and assistance of an insolvency professional — ideally one with a focus on turnaround and recovery strategies. Such an expert will be well placed to provide business evaluation services and can suggest the best pathway forward to return to operational viability.

Continue reading to discover just how a business evaluator can assist you make an informed decision about the future of your company.

If you are the owner of a struggling business, it can be difficult to get a good handle on your current financial situation. You may feel overwhelmed at the facts and figures that are confronting you, or simply not have the financial know-how to comb through all of your records and come up with an accurate final figure.

Business evaluation, conducted by a trained and experienced professional, can assist you examine your current accounts payable, accounts receivable, capital, credit, assets, overheads, and debts to arrive at a fully-realised understanding of your current financial situation.

This type of information is invaluable and will assist you make decisions in the best interest of your business, employees, and creditors.

If your business is going through financial and operational difficulties, there’s likely at least one good reason for it. However, it is not always easy to identify where things are going wrong.

For example, you may be struggling to pay bills on time because you lack appropriate levels of working capital, and your cash is tied up in other parts of your business. On the other hand, losing key employees indicate cultural issues within your company, which can have a significant impact on your bottom line.

A trained business evaluator will be able to use their knowledge and experience to identify the root cause of issues within an organisation, regardless of how large and complex they may be. This will enable you to make an informed decision as to whether it is worth investing the time, energy, and money that is required to come up with solutions.

The Australian Taxation Office (ATO) defines a viable business as one that:

● Is returning a profit to both the business owner and creditors

● Has sufficient cash resources to sustain itself through periods of time in which the business is not returning a profit.

It can be difficult to recover from operating in a non-viable position, however, it is not impossible. Generally speaking, returning to viability will require the business to both increase revenue and cut costs. For businesses facing significant financial problems, this is not always possible.

As a business owner, you are likely to be emotionally invested in your company and it can be difficult to step back and take an objective look at the likelihood of long-term survival. A business evaluator can provide that much-needed impartial perspective to assist with decision making.

Sometimes, with expert advice and assistance, a struggling business can be turned around and return to commercial viability. This process often involves significant restructuring and a re-evaluation of business priorities.

Transforming a business requires extensive planning and understanding of the factors that led to the company underperforming in the first place. The last thing that you want is to only address the surface-level issues and find yourself in exactly the same place, six months down the track.

If you feel that your business could benefit from evaluation, you should start by researching insolvency firms in your area. Insolvency experts specialise in different areas, so look for a company that has experience providing turnaround strategies for struggling businesses.

Before working with an insolvency company, it’s important that you meet with their team members. Implementing turnaround strategies can be stressful and will involve a lot of hard decision making. You will be working closely with the insolvency team and so you want to ensure that you feel comfortable and supported throughout the entire process.

You should also be sure that the evaluator is going to be honest and realistic about your business’ prospects. It can take time to fully evaluate a company and implement an appropriate course of action. You need to have confidence that your evaluator is pointing you in the right direction and that their recommendations are viable to the point where you will be able to continue to act upon them after the evaluator has departed.

A business facing dire financial circumstances often doesn’t have long to act; reach out and organise a  business evaluation today.

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