How to protect your business value as costs increase

How to protect your business value as costs increase

We’re all experiencing a rise in the cost of living but how does this impact businesses? At vfdnet we see first-hand how increased costs are affecting our clients’ businesses every day and we help them to navigate any long-term negative effect on the value and success of the business.

How to best navigate these potential threats and protect your business during these volatile times is what I will cover in our latest insight for business owners.


Avoid the potholes!

Managing a business can be treacherous at times, especially at the moment! You need to lead your team, be aware of what’s happing internally but also external factors that will affect its financial health. You might not have the time or access to the numbers to make the best financial decisions.

You need to maximise the factors you have some control over or at least how you react. Rather like driving down a road that has potholes, avoid them where you can, drive slowly to navigate them as safely as possible and give way to drivers who have no care for what happens to them or their vehicle!

Pre-pandemic the road surface was solid and reliable, no sudden price increases imposed by suppliers or utility providers. Now there may be cracks and potholes appearing, potentially road closures! There may be larger risks that you need to avoid completely to safeguard the future of your business.

Map out your route

Everyone’s feeling the pinch with the increase in running costs and cost of living. An increase in costs means margins going down which in turn equals less profit. Which can lead to hard decisions for MDs. vfdnet virtual FDs see the immediate, short and the longer term impact and how you can best manage cost increases to protect your profit and life of your business and staff. They use financial modelling to forecast and support a considered approach.

More than one supplier putting their prices up is hard to keep on top of. What seems a small increase one month can mount up. For example, if a supplier passes on their increase in costs of 5% in month 1, you may think, that’s OK we will take that. You’ve got 101 other things to get on with. The following month they increase it by 7% and so on for 5 months, before you know it your materials have gone up by over 33%! You haven’t thought through how that should impact your bottom line and cash flow.

It is also true that market change equates to great opportunities as well as significant threats, and decisions taken today to prudently navigate your business through these testing times, may have a profound impact on the future valuation of your business.

Your virtual FD can provide ‘what if’ scenarios using modelling, knowing your market, suppliers and financials inside and out. What prices increases do you need to make? How can you manage your cash flow? They appreciate your time is short and will show you the plan ahead.


Your Co-Driver

Your virtual FD is your adviser on the state of the market and your business finances – looking ahead for potential holes before you drop into one! They’ve checked the road ahead, analysed previous performance and used scenario modelling to calculate potential risks.

vfdnet FDs use financial modelling to advice business owners on the best route, using financial data and scenarios to map out your personal route.

Would you like a co-driver to help you navigate your business to success, through the potholes?

Then please book a call with me to discuss how a flexible virtual FD can guide your business through these difficult times.

your business co-driver

James Shand
Virtual FD and vfdnet Founder & Owner

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