RSS feedsJohn Dunsmure
Managing director, British Chambers of Commerce
The starting point of a successful exit strategy is to consider the factors that would define a successful outcome for you. When? How much? Do you want the business to continue in its current form? Is it important that the buyer shares your ethics? Do you want someone who can take the business to the next level? Do you want to secure the future of your employees? Do you want to get out completely? What would you give up to secure a faster exit?
Answering these questions will help to form your strategy. They will also open a number of options for you to consider. For example, you could find a buyer to take on the whole business or sell in stages and use the money to fund key expansion objectives. Seek venture capital to drive growth in the short term to secure a bigger benefit later. If a legacy is important, you could consider a management buyout or employee purchase strategy.
Once you have some clarity get professional help. Any good accountancy firm will help you directly or point you in the direction of an adviser. Getting professional support will help you to have a viable and realistic strategy and enable you to remain focused on building value in the business.
Rupert merson
Partner, BDO Stoy Hayward
Irvine is asking the wrong question. Before looking outside the organisation at her accounting advisers she should look inside at her accounting staff. Too many businesses don’t recruit decent, financial management in time. You need someone fit for a business of the size you want to turn into, while remaining aware of the problems confronting a business of the size you are now.
Irvine needs to remember that the business will outgrow her accountant. Hanging on to an accountant for too long is almost as great a sin as not recruiting one in the first place. You should aim to change your senior financial officer at £7m turnover, £17m and £70m.
Further, Irvine is to be warned that the recruitment of a capable senior accountant is not an excuse for Irvine to abdicate responsibility for finance herself. The Pure Package is her business: she has to know in detail how she turns ingredients into cash.
When Irvine, as the leader of a small business, eventually gets round to looking at advisers she should remember that big isn’t necessarily beautiful. She needs the advice of a firm that understands her business and where it is in its life cycle. She wants the attention of a partner who has seen it before. She doesn’t want to be some trainee’s case study. For healthy advice she needs a fit firm, not a fat one.
Piyali Williams
Head of professional proposition, HSBC
Before embarking on any growth strategy, it is essential that Jennifer undertakes a review of the business’ current performance, checking the possible solutions against a SWOT analysis. For example, given the credit crunch and slowing consumer spending, it may not be the right time to expand in the luxury foods industry. The Pure Package needs to be realistic and practical when setting growth objectives.
While the company enjoys a loyal customer base, many of these customers are locked into old prices until 2009, therefore already impacting on profit margins. New customer acquisition may not happen at the previous rate and could lead to rising costs in the short term. Assess whether there will be enough resources and capacity to make a growth strategy work and whether any new developments can be financed without impacting funding core activities.
Diversifying into new products targeting existing new customers could ensure the company is not over reliant on one area and will limit the impact of market changes. Franchising is another option as it offers greater opportunities for accelerated growth with minimal capital expenditure. As ever, conduct market and customer research and consider trying a new line or service for a short test period with prototypes before fully committing to new projects.
