Securing a business’s future during uncertainty

Times of crisis can be make-or-break moments for businesses. This is particularly the case during the Covid-19 pandemic, which has inflicted considerable damage on the global economy. Business as usual was disrupted as consumer spending slowed down and supply chains were interrupted, forcing management teams to focus on navigating the volatility.

While the first wave of the coronavirus outbreak is now behind us, it left in its wake a great deal of uncertainty. It is no exaggeration to say we are facing the worst economic backdrop since the end of the Second World War. The good news is that consumer spending has rebound and the manufacturing sector is improving, but so far we have only recovered around half of the lost economic activity.

Indeed, we are reaching a point where we have taken full advantage of the pent-up demand that the lockdown created and we may begin to see economic activity plateau. Making matters worse is that the pandemic is not over yet – a second wave could cause yet more economic damage and uncertainty in the months and years to come.

How privately owned businesses were hit the hardest

Small and medium sized businesses in particular were affected by the crisis more than large and multinational corporations. With better access to financing through financial markets and larger capital buffers, large companies have, on balance, been better able to ride out the disruption. Mid-tier companies, on the other hand, had less access to government stimulus and financing solutions, which put them in a challenging position. As demand levels dropped and sales and turnover dried up, these companies had little choice but to go into firefighting mode to survive.

During times of crisis and distress, it is important for companies to face this head on rather than bury their heads in the sand. Few problems resolve themselves on their own, particularly long-term crises such as pandemics and recessions. In these situations, a company’s business plan is effectively ripped up and replaced with a new strategy – one that is based on an action plan that will help it survive.

Our Reshape Crisis Recovery Programme has been designed to provide management teams with the tools needed to navigate and survive a crisis. We want to understand where a business has come from and determine whether it is in good enough shape to move forward. It is an unfortunate reality that not all companies are able to survive a crisis, but those that take action early before conditions get worse are the most likely to survive. By working closely with management teams, we can help position how the company will look in the future and put together a three-year action plan that will help businesses weather the pandemic and then transition into recovery.

A three-step recovery plan

To stand the best chance of success, companies need to have the flexibility to take action and implement a new strategy at speed. We see three steps to stabilising and reshaping a business, and optimising it to achieve long-term value during times of disruption:

1. Assess the company’s past and current performance.
2. Analyse future potential scenarios by identifying key priorities and overall game plan.
3. Reshape and optimise the business through a lean action plan, new budgets, and reporting system.

Taking stock of a company’s current situation is the only way to put it on the right path for the future, so it is crucial that management teams take a deep dive into their operations. This provides valuable insight into the company’s strengths as well as its opportunities for improvement. It is also important to understand what is realistic to achieve in the prevailing economic environment. It may not be possible to achieve revenue growth, but there may be an opportunity to grow market share over the long term. This is a time to make forecasts and determine what is needed for the company to survive for the short term and thrive in the future.

The outcome of this is a strong recovery plan that uses robust forecasts and actionable insights to provide businesses with the control and reassurance they need when the outlook is uncertain. Based on scenario planning and financial forecasting, it helps management teams make informed decisions for the way forward through the crisis.

An insights-driven recovery plan

The Covid-19 pandemic brought on a financial crisis that has accelerated the demise of an economic system that stopped rewarding good businesses and instead used monetary policy to subsidise investments. With governments and banks not lending to the types of businesses that often need it the most, we are seeing a tighter economy where management teams are facing a situation where they need to fend for themselves to stay in business. Without a strategy, the road to recovery will be bumpier than necessary.

Managing a company during times like these without a proper strategy is much like captaining a ship without a rudder. Because every company reacts differently during periods of stress, it is important to have a detailed business plan that is tailored to their unique circumstances and offers a clear view over a two to three-year time horizon. This approach enables businesses to flex their operational practices and cost base at speed when they need it most, giving them the best chance at success.

Find out more about the Reshape Programme by taking our Reshape assessment. To talk about securing your business’ future, please  and a member of our team will be in touch to discuss further.