When to call in the cavalry – how to get the most out of your financial advisers
All too often fashion retailers call in advisers to examine future options for their business only to be placed into administration just weeks later (Pretty Green and LK Bennett being two recent examples). The key to avoiding this outcome is to bring an adviser on board early enough to make a real difference, says Emma Maile, Senior Manager, haysmacintyre.
In the wake of the recent retail doom and gloom seen on the UK high street, it is more important than ever that fashion brands, of all sizes, have the best possible advisers on board. However, all too often businesses delay engaging financial advisers until the going gets tough, which is more often than not a sinister sign of foreboding. And it is not surprising that in such circumstances, it is not uncommon for brands to enter administration within a matter of weeks.
Advisers can help brands with many aspects of their business, but to maximise value they should be introduced and integrated into a business at the earliest opportunity and not just when the business is struggling.
Future financial planning
Fully integrated advisers, who have helped establish and grow a brand, have a greater understanding of how the senior management teams and founders operate. They will be able to advise founders and stakeholders on how to confront changes and challenges early before they become deeply ingrained issues. Having advisers that are reliable and trustworthy on side from the outset is crucial. Experienced, supportive and strong advisers will be able to provide brands with guidance on navigating the best strategy for the business and will ensure the process runs as smoothly as possible.
Founders who are looking to sell stakes and shares in their business, due to financial difficulty or simply a desire to move on, will be able to sufficiently plan for these scenarios with advisers who completely understand the business. Advisers who have been on board since the start will be able to provide the most coherent and informed strategy, to ensure decisions like these are planned thoroughly and not rushed. The accumulated specialist knowledge of the ins and outs of the business and the founders themselves will also be able to inform the advice they provide.
Good advisers may even look to play out different future scenarios, to ensure their clients know all the possible outcomes of their decisions before crunch time.
Growing the business
Integrated advisers can provide practical and informed advice for brands looking to expand overseas, such as setting up a foreign subsidiary or brand to trade internationally. Advice can be given on the compliance requirements of that country, as well as recommendations of local legal advisors and accountants to help them keep on top of local legislation. This would be more challenging if an adviser has had no prior experience of the business before this stage.
Brands that may be looking to secure additional financing would also benefit from having advisers on board sooner rather than later. Much like planning for a potential exit, or selling a stake in the company, advisers who fully understand the brand and the business are able to provide guidance on the most appropriate course of action. Helping the business obtain finance by using their network to connect them with potential investors and/or brokers, for example, is an ambitious feat without the right expert advice. Good advisers, that have experience of the business through every stage of growth, will not only be able to help secure financing, but can also recommend future exit options when the business is ready to part from a sponsor.
Another stage of growth where advisers can be invaluable is when brands look to involve employees in their successes. For example, guiding businesses through setting up an Enterprise Management Incentive (EMI) share option scheme for its employees to incentivise them to help grow the business.
Voice of reason
Good advisers will also provide management with an objective voice of reason. Brands riding the wave of success are more often than not easily swept up in the excitement of boosted sales, for example when a royal has been spotted wearing their latest collection. However, advisers who understand the business as well as its leaders, are able to give sound and honest advice which will ultimately keep the business on track.
Making them work for you
Arguably one of the most important considerations when looking to appoint advisers is chemistry. They need to get along and work seamlessly with the owners of the business and act as an extension to the existing team.Getting the right mix of advisers is also essential. Having the right combination of law, tax, and financial planning advisers, who have a thorough understanding of the business is crucial. Ideally however, in order to provide appropriate advice and help navigate the trickiest of scenarios, they will need to be in place from the beginning.