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Broker, Banker or Receiver!

Now I have your attention, I want to remind you that your business is your business and you need to manage it well especially though an economic downturn. Don’t let things get out of hand because before you know it, you start having to report to the bank. Then, before too long you have stopped managing your business as the receivers are doing that now.

I agree that’s a bit dramatic, but it is happening! Let’s look at the basic warning signs!

 Track your monthly results

Track Sales, Gross Profit, rent and wages and compare them to the same month last year and in total. Essentially, if your income in not growing faster than your expenses you have a problem and your business is going backwards. There can be many reasons for this including one-off reasons like road works around your pharmacy or a flood. You can recover from this. Other ongoing issues need support and a plan to deal with the issues.

High gearing

If you have high gearing and this is compounded by the need for principal reductions and the above was showing the business had slowed or was tracking backwards it adds a new level of pressure. Don’t try and play with trading terms as it is such a shot term Band-Aid. Read on and get help.

New competition relocations and market segment

What about a discount model pharmacy moving into your area or a local pharmacy relocates and or changes brand. That pharmacy has decided what market segment they want to attract. It would be reasonable to say that the discount model is after your customers and the relocated re-branded pharmacy also see an opportunity for more market share. What do you do?

Time to get help!

Sorry, I didn’t mean your usual help that has a vested interest, I mean independent help!

Start with your accountant and ask him to analysis your results against others and do some projections for the next two years. We have a base of four months now following PBS reforms to assist in the projections. It is likely that others have asked for the same work to be done and reported so your accountant should be prepared and have some early answers for you on a macro and micro level.

There are steps that you can take regarding the performance of your business and they include:

  • Refinance current Principal and interest loans to interest only through your current bank or another
  • Refinance lease agreements or pay them out with a now loan. This will ease cashflow.
  • Consider you’re branding and buying options to create a better fit with the market segment you see avalible. The SWOT Analysis and the Boston Consulting Group model will help you work through this maze. Be very clear that the opportunities that certain brands / franchises bring far out way the cost and commitment to join that brand.
  • Consider wages as a percentage of sales and consult with your accountant as to what they should be. Have you got the correct structure in place.
  • Extending credit is not the answer and it will bit hard if things don’t work out
  • Rental costs, market reviews and even relocation should all be considered for significant savings and opportunities.


Broker before banker and way before Receiver

Sometimes we think putting a Band-Aid on it will fix everything, but the infection can spread. What I’m saying is if all of the above is not helping or time and energy is beyond you then it’s time to have a chat with a good independent fully qualified broker. Have a good confidential chat and the broker will not rush to sign you up, but provide options like:

  • Market appraisals based on sales evidence and valuation data to determine your current value. This will again help clarify some of the options
  • Partnerships can reduce exposure and improve skills where you are not strong.
  • Vendor finance options whereby you sell the business but leave some money in the business earning a healthy rate.
  • Amalgamation opportunities. Consider who is around you and work through this with the broker
  • Independent advice on relocation and rebranding.
  • Help you prepare your business for sale purposes and represent you to the market in the best way possible.

Whatever steps you take, take the first step now. If a Band-Aid is all you need at least you can get on with things, however if more is required don’t consult your doctor, consult a good independent fully qualified broker. If you’re not sure who to call start with me for a confidential discussion and I will be pleased to assist you.

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