There is much economic uncertainty during the current “pandemic era.” How long will this last? Is this really the new normal? Can my business weather the storm?
While things remain uncertain and we have no “crystal ball” answers, there are some fundamental steps businesses should take to be prepared and manage the the ongoing, unstable business climate. Whether you engage an advisor to provide an independent view of your situation, or you rely solely on your current management team, every business should be cognizant of the following five key directives:
- Build or improve your management and decision-making tools now. There will be persistent disruption in the supply chain and labor markets for an extended period, well into 2022, if not beyond. Prepare functional tools such as a 13-week cash flow model or a profitability and capital allocation analysis by customer/product/service, to help navigate the continuing uncertainty in real time as condition change.
- Many companies have opportunities to create additional liquidity. The credit markets currently have significant capacity and companies are capable of monetizing different assets on its balance sheet, but this should only be done as part of a comprehensive plan to improve current performance and long-term sustainability. Don’t use the cash generated by these extraordinary, one-time events to merely cover cash losses.
- Your business is only as strong as the weakest link in your supply chain. Are your key procurement sources diversified or sole-sourced? A JIT production model doesn’t work during a global pandemic. Do you have multiple reliable shippers? Do you have access to the materials to build safety stock? Do you have sufficient working capital to build safety stock?
- Maintaining your talent pipeline must be a core competency. Focus not only on recruiting, but also retention. Businesses need thoughtful COVID and WFH policies to attract/keep key contributors.
- Communication is key, both internally and externally. Give your business partners (employees, lenders, vendors, customers, et al) the visibility and predictability you want from them.