Many business leaders are reviewing their strategy in light of the Covid-19 pandemic. Some have been forced to do so as their market is disrupted, while others are taking the initiative to ensure they emerge as winners in an ever changing world.
More than ever, the quality of these decisions will only be as good as the information on which they are based.
In a contracting economy, opportunities for organic growth become limited, leading ambitious management teams to look for opportunities to grow through acquisition. When evaluating potential deals, detailed and up-to-date financial data is essential to inform decision-making.
The same principle applies for businesses whose immediate priorities are consolidation and survival, rather than growth.
Sam Phillips, transaction services director at PKF Francis Clark, said: “Businesses and management teams must adapt to the changing times, and will be required to make quicker decisions.
“In many instances, the key challenge is reliable data. Management information required for running the business is often not detailed enough to make informed investment decisions or strategic plans.
“Another problem is that information is not updated quickly enough. In a rapidly evolving situation, data that is a month old is often too old. Weekly or daily information is needed to enable informed decisions to be made quickly.
“Where there is uncertainty, management teams will be required to make assumptions. If they are conservative with their assumptions because they don’t have the detail, this can limit opportunities for growth. Using analytics can bridge this gap.”
Data analytics is an integral part of PKF Francis Clark’s Business Review service, which provides:
- A comprehensive assessment of your existing assets – including intellectual property, skills and connections, as well as physical assets
- Analysis of how your marketplace is changing, considering areas such as changing customer demands, emerging markets and alternative routes to market
- A fundamental review of how your assets and skillsets could be used to exploit emerging opportunities
- Setting out your options and projecting the potential financial consequences of decisions under different scenarios
- Providing challenge to decisions, and opinions, recommendations and actions
“We can help by getting under the skin of a company’s finances and data to understand what the key drivers are and where there are opportunities for improvement, which therefore helps people to make decisions in this environment,” said Sam.
Growth and resilience
“By really understanding your business and having insights at a granular level, you have more opportunity to think about where the growth levers are. For example, understanding your gross margin mix is key to knowing what service or product lines you should be focusing on.
“It’s not just about growth – it’s about resilience and managing the current climate. If management teams take a step back and understand the drivers and dynamics of their sector, they can properly plan for the scenarios they are likely to face.
“With management teams working from home, if they are not investing in technology and quality financial information, then all of the more practical guides they use to make decisions become more difficult.”
As well as informing strategic decisions, high quality financial data can help businesses to secure additional funding.
“The more detail you can give your funders or investors, the more willing they are going to be to support you,” added Sam.