Economic outcomes are reached in hindsight and we apply the learnings. Today’s world does not have standard practice to draw on. Innovation, agility and sustainability are common themes being implemented to address 2020’s challenges and future predicated challenges. The current economic downturn is expected to be worse than post WW11 and, for some countries, the worst decline since 1870.
Government Stimulus Packages that have been implemented are expected to be a pillar of the recovery plans globally but not a majority percentage of it. Businesses need to adapt, identify opportunities, speed up and be able to scale up. Big asks whilst you, the business owner, juggle survival lists. Financial services consultants are key role players in your emergency re-engineering.
Here are five recommendations for navigating the current crisis
1. Act Quickly But Do Not Rush
With anxiety leveIs at a peak and millions dying it is easy to lose the plot. Do exactly the opposite. When cash strapped, you are at risk to make bad financial decisions. Definitely start taking action but as every day reveals a bit more about the economy, get better information. Information is your friend. Then before making any big leaps, take a cooling-off period, consult with a professional third party to look at your findings. Or start with them in the first place. This will avoid expensive regrets. Definitely start making detailed contingency plans. Keep it simple and plan for the very short term with 1 to 3-month projection with multiple outcome scenarios e.g. same, worse, better. There is a plethora of social psychology and behavioural economics showing that people who make plans achieve goals more easily.
2. Government Stimulus Packages
Find out all the government stimulus packages that are being made available to you. There is a lot of noise out there so find out from a professional about every scrape of financial aid available. The sooner the better as the “queue” is growing. You can decide how to allocate the money later. A number of companies applied for access to funds immediately upon seeing the pandemic in the East. They did not need the money then but they wanted to have it when it was needed. Globally government stimulus packages are being given, reserve banks have been instructed to soften rates and banking institutions have been instructed to slash rates in all areas.
3. Focus On Clients
Your customers are as shocked as you. Their lives are changing monthly and may never be the same again. They are service sensitive and price-sensitive and your short term cash flow needs them to choose you amongst all the chaos. Start planning towards their potential needs post-pandemic as part of your long term strategy. New habits are being created right now and the longer the pandemic is around the greater the acceleration of new habits being created. You need to innovate if you want to remain in the forefront of their minds amongst homeschooling, home working and changing government regulation messages. Contact them, survey them, ask about their new life habits and needs, ask about future aspirations and inspire them. Work out what exciting experience they will want post-pandemic.
4. Conservative Accounting
After reaching creative solutions and carefully planning them, you need to do the money wizardry. Calculate a cautious cash flow for current and for post-pandemic. Identify expenses that can be ditched or refined. Cut sooner so that, if required, key expenses can be serviced later. Identify which expenses can be postponed or be trickle paid partially. It is important that a) you are transparent to creditors and b) you are cognisant that catching up later will be tough. Touch base with your financial services consultant monthly for an update of new financial sources. There are new resources coming on board frequently.
5. Retaining Talent
Your human resources are very valuable. Your highly skilled/talented resources may jump ship if things look too dire. This will be a huge blow to operations that you are trying to slim down. Even if you have to retrench them work on the relationship so you can rehire them later. The long term view and EQ are critical. Loans made to SMMEs are meant specifically for avoiding layoffs. Check with your financial consultant if it is more beneficial for the employee to be laid off (greater benefits) than being on a short time. Use special leave dispensations rather than retrenchments etc but discuss it with your team to ensure everyone is comfortable. Regardless of what has said above it is paramount that you make sure your employees, retrenched or not, are safe. Be generous in these unprecedented times thereby earning loyalty. Act with urgency and prudency. Be innovative and customer-focused.
Contact Your Financial Director today for top COVID-19 economy learnings from a Director. They will walk the SMME or large company strategy journey with you, navigating the COVID-19 world, facilitating swift decisions and opportunities. Call us or email us to set up an appointment.