How much wiggle room does your business have?

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We often hear businesses tell that the tail is wagging the dog when attempting to take control of its finances when unexpected circumstances occur. Yet, this needn't be the case.

At GSM we work with our client companies to put predefined action plans in place which, if called upon, will reduce reliance on a singular approach to effective financial management of the business. In this way, with a multi-faceted strategy you can contain costs, maintain efficiency and move with alacrity, when the time arises.

As a result, the financial cushion and flexibility that a business will instil throughout the organisation to withstand unexpected expenses, changes in market conditions, or operational disruptions, will provide a margin of safety to allow it to navigate through uncertainties without facing dire consequences.

Such prudent financial management can turn a pessimistic outlook to optimism for the future. And when that positivity is supported by a framework of scenario and/or contingency planning, negativity recedes even further.

When conducting scenario planning, we can evaluate how your business would fare under different economic conditions or operational scenarios. By modelling best-case, worst-case and most likely scenarios, together we can identify potential vulnerabilities and proactively implement strategies to mitigate risks. In developing contingency plans for various risk factors such as supply chain disruptions, regulatory changes, or fluctuations in demand, we can ensure there's room for quicker and decisive response when unforeseen events occur, minimising their impact on your operations.

Practically, we may well recommend building adequate reserves to bolster your financial resilience and retain the flexibility to seize opportunities for growth, or having a buffer to ensure that your business can weather unexpected challenges or withstand temporary setbacks without sacrificing long-term stability.

Similarly, reviewing your working capital, including accounts receivable and accounts payable, can free up cash flow and improve your financial flexibility. Implementing new stock control systems, changing distribution channels, incentivising early payments from customers and negotiating favourable payment terms with suppliers are also effective tactics which can allow you to adapt to changing market dynamics.

These are just some of the tools your accountant can plan to provide you with, alongside the guidance you may need, all without resorting to emergency measures like borrowing at unfavourable terms or selling assets.

So, assessing and maximising your business's wiggle room is not just about financial preparedness, it's about resilience and adaptability in the face of uncertainty. By understanding your financial strengths and weaknesses, proactively managing risks and embracing flexibility, you can improve productivity and responsiveness and position your business for long-term success however your market evolves. To discuss how GSM can help strengthen your financial management and adopt a more comfortable position for your business, whatever the commercial environment, call us on 020 7935 3793