Business Plans

Business plans are an integral part of any business and are a fundamental tool for management when driving the business forward, as well as being key when it comes to raising finance. Good, well thought out business plans, supported by a robust financial forecasting model are essential components for a successful business.

On the other hand, business plans that are all optimism and hope, that show a “hockey stick” upturn or improvement in financial performance that is not supported by current or recent trading activity, only serve to erode the credibility of management with their key financial stakeholders.

The Kingpin team offers a wealth of experience in authoring or reviewing business plans and the underlying financial models on behalf of management and all kinds of stakeholders such as shareholders, lenders, landlords and pension schemes. We can assist in:

• Consultation with management and robustly reviewing business plans for consistency and clear logic.
• Advising on the suitability of the underlying assumptions, in particular highlighting any vulnerabilities.
• Advising, where appropriate, on suitable changes to the forecasting model, which may include;
  • adjustments to the timing of any cash flow items,
  • introduction of best and worst case outcomes,
  • application of sensitivities to reflect inherent forecasting risks.
• Building appropriate models.
• Advising on format, detail, and content when seeking to raise funds/extend facilities etc.
• Coaching and advising management when engaging with recovery bankers and stakeholders and/or their agents to ensure the fiduciary duties are adhered to.

Raising Business Finance

Firms seeking to finance growth, even with a good business plan and experienced management, can experience difficulties in raising finance from the traditional bank lenders. Regulatory constraints abound and the financial sector can often be wary of particular sectors.

Kingpin Advisory have a network of contacts within private equity firms, invoice factoring and discount houses and other financial intermediaries. We are not financial brokers nor do we earn commissions from any introductions. Our role is to assist management in identifying the type and sources of finance and effecting such introductions as are appropriate. 

Non-Executive Directors (NED)

All too often management is faced with a very real problem which may require a set of skills that the management do not possess.

For example there might be an acquisition requiring a factory move; the financial directors can budget for the costs, the sales and production directors can reflect the benefits in their budgets etc, but does the managing director or any of his team have any experience in the logistics involved in a factory move? Does anyone understand the logistics and planning involved and the health and safety issues that need to be considered?

Similarly, mature businesses that face increasing financial pressure need Financial Directors that have been through such situations previously. The solution is to secure the services of a NED to bolster the existing board and assist in delivering a successful project and/or deliver a financially robust business on the other side. At Kingpin we assist and advise management at a strategic level and particularly in distressed situations.

The skills required from a NED depend on each assignment but usually would encompass one or more of the following:

• Key experience, possessing a “been there done that” track record.
• An ability to work with the existing board.
• Discrete skills required for the specific assignment; avoid duplication.
• Flexible – short or medium term involvement, as required.
• Specific operational management expertise where required.

 It is not unusual for the ongoing cost of adding a NED to be highlighted, but clearly if it is a choice between the business achieving its goals or failing, then it is a necessary cost! 

There has been increased competition in the NED sector over the last few years and we have found that experienced candidates are now more affordable and there are many NEDs who specialise in working with smaller SMEs. NEDs, if properly chosen, should add profitability by increasing effectiveness and choosing the right NED is key to this.

Our network of trusted experienced NEDs cover the management spectrum from interim financial directors to manufacturing and operational change managers. Please contact us if you a looking for a NED to assist with a particular assignment. We maintain our panel with no cost to yourself; any engagement would be direct with the successful candidate for the NED role.

Exit Strategy

It may seem odd to include Exit Strategies under the Business Future heading, but read on and all will become clear. Businesses have an inherent life cycle and sooner or later the markets mature, competition increases, margins erode and it becomes difficult to sustain viability.

Preventing decline can be addressed by such actions as strategic acquisitions, launching new products, exploiting new markets or sales channels, implementing management changes and cost saving, including redundancy programmes. However sometimes, elements of the business may become non-core or a “lame duck” and end up being a financial millstone around the neck of the rest of the Group.

In such cases consideration should be given to the appropriate strategy for the non-performing areas, so releasing drag on the rest of the group. Such strategies usually fall within three main headings:

1. Fix - management may decide to implement a refinancing or restructuring either at a balance sheet or operational level.
   
   
2. Sell - a disposal of the business either as a normal corporate transaction or as a distress sale (dependent upon the cash drain caused by the under-performing business).
   
   
3. Close - initiate a formal insolvency process thereby drawing a line on the capital being absorbed by the loss making business. 

Kingpin Advisory are experienced in assisting lenders, management and key stakeholders on assessing and implementing the available exit options, the likely financial recovery and the practical impact on the Group/Company or associated businesses of implementing any proposed strategy.