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The Big Challenges 2024

12 June, 2024
Yorkshire Event Panellists 1

On 5th June 2024, we were kindly hosted by RSM and sponsored by Finance Recruitment Consultants Headstar at a panel discussion and networking event in Leeds. Neil Muffitt, Finance Director and former Headstar Chair led the conversation to capture insights on the Big Challenges facing businesses in 2024. Craig Cartlidge (Barclays Business Support), Gemma Wright (Reward Finance Group) and Martin Jesper (an accredited turnaround executive) were well-placed to provide a 360-degree turnaround perspective.

The 45-minute discussion, which included a Q&A session with the audience, covered a range of topics from management team skillsets, access to the right finance, impacts of higher interest rates and changes within the lending environment. The key points, together with responses are grouped below:

Q: The reasons for negative growth have changed. With inflation no longer being the big issue, what are the key challenges facing business today?

GW: Access to the right type of finance. The number of online banks now exceeds traditional banks, which is good for choice, but not if businesses don’t understand which funding is suitable for their needs.

CC: Those businesses that thrived through the pandemic may see demand for their goods/services falling . Some look to plug the financial gaps but fail to address the underlying cause.

MJ: Some businesses lack the finance skills to know what to do when affected by negative growth. Some do nothing and hope for the best, others believe all they need is cash to fill the gap.

Q: What has been the impact of high interest rates?

GW: Inexperience of this type of situation aggravated by succession changes – experienced personnel retiring or leaving the business. We’re seeing cases of the lonely MD without the right team around them to help them plug the knowledge/skills gap.

CC: Management teams who have little experience of managing financial stress. Over the last 10-12 years, there have been changes to the levels of regulation around compliance with a preference for a consensual approach.

MJ: During the pandemic, businesses were given time by lenders to manage stress if they could evidence working with a turnaround specialist. Those with the right experience understand the pitfalls and sound financial decision making. Worryingly, there has been an increase in general finance roles claiming turnaround expertise.

Q: What challenges do business owners present?

MJ: Getting owners to face the truth, understand their journey and accept what needs to change. The pandemic has been blamed for much, when in reality, some businesses were struggling pre-2020. As an independent turnaround specialist, you have to be honest and sometimes blunt. The problem can be the business owner themselves, not necessarily the finance team or person.

CW: Resilience in some ways can desensitise people to the real situation and cause them to delay the inevitable. We provide an independent viewpoint that cuts through the emotional barriers. Occasionally you have to show owners the burning bridge.

CC: People aren’t always clear what an Interim Turnaround Manager can do to help them navigate difficult financial periods. Helping owners understand that there needs to be a shift in focus (e.g. from profits to cashflow) to get their business back from the brink.

Q: What changes are there in the lending environment?

GW: We have seen more of the mainstream banking customers looking to reduce their borrowing costs. In some cases, they’ll approach their bank and then come to us to bridge the gap. Lenders require certainty.

CC: Speed has been an issue for owner managed businesses who look around for quick decisions.

Q: How does the borrower know where to go?

CC: Unfortunately, it can be the path of least resistance which has seen a rise in inappropriate lending requests. Good brokers have a bigger part to play in guiding their customers.

GW: Not all brokers direct their customers to the source. To provide the best service for their customers, they need to be experienced and be motivated by their customer’s best interests.

Audience Q&A Key Takeaways

  • To Turnaround specialists, financial stress is not new. They help owners understand the real position and have strategies to help their clients deal with financial challenges.
  • The business world is changing at a faster pace. For example, AI and climate risk. Don’t stand still.
  • Banks are more open-minded to share risk through collaborative lending relationships with lenders in the non-bank spaces.

RSM: www.rsmuk.com

Headstar: www.headstar.co.uk