Three ways to help your business thrive in the new normal
In the past few months, we have seen the world as we know it being turned upside down: millions of people have lost their jobs and incomes, companies have been struggling, supply chains have faced major disruption and financial markets have been rattled. It’s fair to say that the coronavirus and the subsequent national lockdowns have challenged all our long-held business assumptions and rules of operation.
We still don’t know how long this pandemic will impact global economies, and even once lockdowns are fully lifted there will be no going back to “business as usual”. With the OECD predicting the most severe recession in nearly a century, we can’t shy away from the need for change. A new reality is sinking in, one that is pushing companies of all sizes to think of new ways of doing business and adapt to a world that has changed forever. This will require careful planning, scenario analyses and sometimes a rethinking of their business model.
Finance professionals drive effective business management in any economic climate, but it is in times of crisis such as these that their expertise and skills really come to the fore. They have already played a crucial role in helping their companies to mitigate the immediate financial impact of the crisis and to access the vital funding that will ensure short-term survival, including cashflow management and scenario planning. As companies look to the future they will rely, possibly more than ever before, on the expertise of their finance teams to help them recover from the crisis.
Here are three ways finance professionals can help their companies navigate uncertainty, improve operations and, eventually, thrive again in a changed, ever-evolving environment:
Scan the new business horizon
Finance professionals now need to explore possible future scenarios and what steps need to be taken to safeguard their company’s future, integrating elements such as digital transformation, supply chain, the regulatory environment, or changed customer behaviours. Companies need to think about the future through the perspective of different stakeholders in their company and how this affects them. It’s only once they have done so that they can devise new, sustainable business strategies and drive recovery.
Focus on key strategic issues
For finance professionals to assess the true impact of the pandemic on their companies, they must look at how their long-term performance and strategy may have been affected. Identifying, analysing and addressing a company’s strategic issues will often be the difference between having a good and a great strategy to build out of lockdown, return to normality and grow. So what do companies need to think about?
Ask future-focused questions
A business model doesn’t just relate to the operational aspects of what a company does – the products and services it delivers on a day-to-day basis – and the financial metrics associated with those. It’s a much broader framework, which encompasses the purpose, values and strategy of a company, articulating how it meets the long-term needs of its customers and other stakeholders.
As companies navigate towards the post-coronavirus world, they must holistically review their business model and establish how it has been affected by the crisis, looking beyond the hit to their short-term financial performance. To avoid making decisions that could potentially lead to future corporate failure, finance professionals need ask future-focused questions to assess how their organisation defines, creates, delivers and captures value in a changed environment. This includes questions such as:
The road ahead will of course be difficult but carrying on as before the pandemic simply isn’t an option if companies want to survive. Armed with the right information and scenarios, finance professionals can help their companies plan their transition to a post-COVID-19 reality, build more resilience, and generate and preserve value — not just in reaction to the current crisis, but in preparation for whatever comes next.
Andrew Harding, FCMA, CGMA, is the chief executive – management accounting at the Chartered Institute of Management Accountants
Find out more in Business Resilience: Tools for preparing to reopen businesses report