ifac recently conducted a comprehensive business review of a food business to assess each part of its business. The business in question had multiple business activities and each required scrutiny. As a result, ifac was well placed to advise on the efficiency, profitability and ultimately; the viability of each part of the business. Below is an outline of the essential elements for a successful business review:
Key Elements of an ifac Business Review
Reviewing Current and Past Accounts:
Analysing historical financial data to identify trends and patterns i.e. issues with stock control;
Identifying areas of concern i.e. production labour efficiency;
Following discussions with the client, provide recommendations to remedy or improve the functions of the business.
Analysing Each Product's Performance:
Assessing sales data for individual products to determine their contribution to overall revenue;
Identifying high-performing products and reviewing the real contribution being made to the business i.e. determining if the high sales volume products are making a sufficient margin and contribution to the business;
Reviewing products that may need re-evaluation or discontinuation.
Using Up-to-Date Data:
Ensuring the analysis is based on the most recent financial information;
Incorporating real-time data to make informed decisions.
Conducting Break-Even Analysis:
Assessing the viability of each business activity i.e. a business may have a retail location and a production facility. Each needs to be assessed individually;
Identifying the break-even point of each business activity i.e. ensuring that all costs incurred in the business are correctly allocated and a break-even point is clearly identified;
Using this analysis to set sales targets and review current pricing strategies.
By focusing on these key elements, we gained a thorough understanding of the food business's financial health and identified strategic opportunities for improvement. Our approach ensured a detailed and actionable review, providing valuable insights to drive the business forward.
