Stress testing your business

The recession had a major impact on private businesses and the current growth forecasts suggest that the road to recovery may be longer than expected. When you couple this with the ongoing Eurozone crisis, it’s going to be important that your private business plans for the worst, but hopes for the best.

As a private business owner, you should think about your own ‘stress test’ and ask yourself the following questions:

• Is my business prepared for a long road to recovery and another potential down-turn?
• Do I have sufficient cash resources or borrowing capacity to see me through another tough patch?
• Is my business and wider wealth suitably diversified?
• Are valuable assets and surplus cash protected

The old motto of ‘be prepared’ holds true as there are a number of actions that you can take to reduce risk. The private businesses we’re working with are typically thinking about the following:

• Restructuring to move valuable non-trading assets away from riskier trading operations.
• Agreeing extra borrowing capacity with their bank.
• More structured business and cash flow scenario forecasting.
• Working with the auditors to better understand the important business risks.
• Safe havens for excess cash, and specifically the risk of another banking crisis.

If you have concerns in this area and would like to learn more about how we can help you prepare, please get in touch with Chris Romans via email or call him on 0121 265 5432.