Business Reality Check

1. February 2023
BUSINESS REALITY CHECK
Charting the Course for your Business

2. Business Reality Check
• Economic and Industry Analysis
• Strategic Direction
• Governance
• Management
• Track Record & Financial Analysis
• Company Valuation
• Environment & Sustainability

3. Economic and Industry Analysis
Benefits to be obtained from this section
• Empower businesses to base their decisions on the
macroeconomic situation
• Identify the direction your industry is heading
• Facilitate comparability between companies within that
industry
• Identify whether your company is thriving or lacking behind
competitors.
Analysis in this section
• Macroeconomic analysis
• Economic forecasts
• Detail industry analysis
• Industry benchmarking
• Linking the economic context to business performance

4. Strategic direction
Benefits to be obtained from this section
• Understand your business better
• Address weaknesses
• Deter threats.
• Capitalise on opportunities
• Take advantage of your strengths
• And develop business goals and strategies toward success.
Analysis in this section
• Help businesses gather a strategic mindset, to stop just having an operational mindset,
and give planning the priority it serves.
• Help businesses understand what their real strength and weaknesses are and also link the
opportunities and threats from the external environment.
• Help businesses to determine the company’s objectives and priorities and how it should
plan to accomplish them.

5. Assessing Governance
Benefits to be obtained from this section
• Efficient processes
• Smooth running operations
• Good reputation
• Clarity
• Financial sustainability
• Clear strategic direction and objectives
• Effective response to changes in the external environment
Analysis in this section
• Corporate Structure
• Relationship between Board of Directors (BOD) and
Ownership
• Assessing Company’s Strategy
• Attitudes towards Corporate Social Responsibility (CSR)

6. Assessing Management
Analysis in this section
• Attitudes Toward Strategic Planning
• Attitudes Toward Risk
• Attitudes Toward Growth
• Management Attitudes towards Objectives
• Attitudes Toward Execution (Responsibilities)
• Training needs analysis
Benefits to be obtained from this section
• Ensure that the management hold the right
attitudes and qualities to successfully execute any
strategic plans.
• Effective employee management strategies will
benefit the company as it will:
• Strengthen employee retention, thus lower the
cost in relation to employee turnover.
• Keep employees productive and successful, thus
increasing the company’s profitability.
• Foster a positive work environment
• Ensure an exceptional working experience
• Deliver a Training Needs Analysis to provide what
skills gaps are needed for management to perform
well

7. Business Track Record & Financial Analysis
Analysis in this section
• Previous Statements
• Budget vs. Actual
• Key performance indicators (KPIs)
• Financial Trends
• Net Cash Flow at Different Stages
• Financial outlook/forecasts
Benefits to be obtained from this section
• Better debt management
• Better cash flow management
• Reduce risk exposure
• Improve supplier relationship management (if any)
• Help owners to identify the best possible investment
opportunities

8. Company Valuation
Analysis in this section
• Financial Forecasts
• Weighted Average Cost of Capital (WACC)
• Discounted Cash Flow (DCF)
• Trading multiples
• Peer comparable
• Change in value over recent years
Benefits to be obtained from this section
• Measuring year-on-year company growth and
building comparative data
• Compare the business against the industry
benchmarks
• Can prepare the business for sale and
establishing a sale price
• Help the company secure investment and funding

9. Reduced utility consumption & costs
Demand for eco-friendly goods
Green company reputation
Potential for investors
Grant schemes
Tax benefits
ENVIRONMENT
& SUSTAINABILITY

10. STEP 1:
PROCEDURES

11. STEP 2:
BENCHMARKING

12. STEP 3:
SOLUTIONS

13. Governance
Management
BUSINESS
REALITY
CHECK
Direction
Valuation
Financials
Sustainability
Economy

14. To improve is to change;
To be perfect is to change often.
Winston Churchill

15. Kurt Muscat, EMCS
Yasmin Schembri, AIS
BUSINESS REALITY CHECK
Assess – Implement – Improve