Here for Hertfordshire businesses

Simon Carvill-Biggs, Partner and restructuring specialist at FRP Advisory in St Albans

We all know that the last few years have been among the most challenging in living memory for businesses. And we are not out of the woods yet.

Consumer household budgets are under intense pressure as inflation continues to colour the economy – eroding demand and affecting buying decisions across the board. At the same time, firms’ own operating costs remain stubbornly high. For example, a recent survey led by the team here at FRP, found that two-thirds (66%) of UK retailers had seen their operating costs go up, by an average of around a fifth, in the past year.

However, there are still some positive economic indicators that we can take heart from. Indeed, the UK appears to have avoided a recession, market rates for energy have begun to fall and private sector output is slowly increasing.

As a restructuring professional based in St Albans, I’ve seen first-hand how businesses across Hertfordshire have worked hard to adapt and shore up their margins during this time. But there is still a worryingly high number of firms that are concerned about their future.

In these conditions, what can our county’s businesses do to bolster this resilience – and address any cracks in their operations?

Forecasting fundamentals

Keeping a close eye on the fundamentals – ensuring cash flow forecasts are up-to-date, and tightly managing working capital – will be critical in the year ahead.

Management teams will need to ensure that they have multilevel contingency plans in place for every possible scenario. Ultimately, those that thrive will be those that can be flexible and respond positively to change.

I always recommend creating a 13-week cash flow forecast, which will take in weekly and monthly receipts and payments, as well as quarterly payments like VAT, rent and interest charges, to identify any pressure points during the period. Should any shortfalls be identified, management teams can then carefully review their options and put robust contingency plans in place.

Forecasting isn’t an exact science and firms will have to rely on certain assumptions based on past activity. It can be useful to compare an organisation’s actual performance against forecasts made earlier in the year to help improve future planning, by incorporating any adjustments that better reflect the current trading environment.

If your forecast does expose any unpleasant surprises, the most important thing to remember is that a problem aired is a problem shared.

Proactive and open communication with all stakeholders can give your partners the opportunity to consider all their options and suggest solutions. Suppliers will be far more inclined to agree concessions if the request is backed up by the financial data to support a credible plan to resolve any issues.

Where signs of distress are identified – or even if you just need an experienced sounding board – the honest advice of an expert with technical expertise and commercial understanding, can be invaluable.

My corporate restructuring colleagues and I in St Albans can help Hertfordshire businesses make sense of complex situations, providing constructive solutions and sustainable long-term plans to turn businesses around and save jobs, where possible, or support with orderly wind-downs.

Eyes to growth

But our support isn’t just about the difficult times. There are opportunities for growth even amid challenging conditions.

The market has remained buoyant across all aspects of M&A. Indeed buyers still have an appetite for the right businesses, and my colleagues and I continue to see a vibrant market driven by consolidation. We expect the demand for good quality firms to hold up as trade buyers seek ways to futureproof their businesses, with an eye for strategic acquisitions that can help them boost efficiency or enter new markets.

At the same time, our Debt Advisory team is working with numerous privately held or private equity-backed businesses to raise and favourably refinance the capital they need to fuel their ambitions.

Our St. Alban’s office is just one of 26 offices in England and Scotland, and a new international office in Cyprus. Through this network, we deliver restructuring, corporate finance and debt advisory services, as well as financial advisory and forensic services. So, if this article prompts any questions, or if you’d like to discuss any of the issues raised, please get in touch.

Carvill-Biggs

St Albans

+44 (0)1727 735 222

+44 (0)07762 897 952 simon.carvill-biggs@frpadvisory.com frpadvisory.com