03rd Mar , 2021
COVID-19 is reshaping our world, and as a result, you need to reshape your business. How will your business adapt, grow and prosper post-COVID? Business leaders are facing challenges never seen before, meaning the support and independence of business mentors in Melbourne is more important now than it has ever been.
To succeed post-COVID, you will need to assess the possible business scenarios that you face. You will need to select a strategy to take advantage of the possible scenarios. You need to direct your business to where it can be successful and comply with COVID safety requirements and regulations.
To start in assessing your future strategy, you should consider the following steps immediately:
These are just some of the scenarios a business mentor or coach from International Business Mentors can assist with. These steps are further fleshed out below.
To rebuild the business and develop scenarios, you must determine the extent of any financial damage to the business and the increased cost of business in the future.
Ensure that your financial information is up to date: i.e. the profit and loss, balance sheet and cashflow, and especially the cashflow forecasts. Assess the impact of the pandemic on sales, including impact on prices, volume and mix of business coming through.
Also consider any changes to staff levels and the use of premises such as head offices and operational properties, and consider what this means for the future configurations of working with staff and remote working. Determine if you need to gear back up the staff numbers in the likely scenarios in the future.
What has happened to marketing spend, and where will it be spent in the future to attract and retain customers and sales? Particularly look at the potential to further use online selling approaches and social media marketing.
Look at customers that you may have lost and come up with a plan to recover these. Also, look at continuing customers and think of ways to make them more loyal.
What is the ideal operating model and therefore the staff required to operate the business? What ramp up costs are involved, and the timetable required? If you’re unsure where to start, business mentoring can point you in the right direction.
Coming out of COVID will either take you back to how you operated with some tweaking required or a completely new business model will be required for the new normal in your markets. You should analyse your industry and specific markets to understand the changes resulting from COVID-19 and crystallise the optimum new strategy for your business. What is driving changes? For example, a new business model may be driven and depend on how you will interact with customers in the future. Perhaps the personal interaction in the past may be less important and become partially or fully online in the future scenario. These are areas our business coaches and business mentors in Australia can assist with.
Analysing how your overall industry has been affected by the coronavirus pandemic will be essential for developing the revised business strategy. Research your competitors and your industry, look for the new trends, and focus on new gaps in the market or new opportunities that are critical to recovering or expanding your customer relationships and sales.
You should look at the current strengths and weaknesses of your business and how these relate to the new normal in the markets. You may have to revisit your strategic plan and look again at your strategic competitive advantage given the changes you find, and any adaptation required to compete successfully in the near term and the longer-term future. You should also look for short-term opportunities that COVID has thrown up to use your spare capacity and drive up financial performance in the short term.
Your revamped strategy will need funding, so you will need to understand your cashflow forecast going forward and funding requirements to deliver that strategy.
Funding is a constraint in any strategy. If it can’t be funded, it will not happen. So, you should consider if sufficient funding can be achieved by speaking to your debt and equity providers to negotiate the quantum and cost of any funding required. The funders will want to know:
The potential funders will also have their own risk appetite for their exposure in your business and the industry sector. They will look for security and insist on triggers of ratios or covenants to ensure that they can pull back out of the funding if things do not go according to your new plan, as agreed with them. This funding process may significantly change your scope, and a wider source of funding may need to be considered.
Funding may be difficult to obtain, particularly if your financial performance and/or security are not sufficient for the funders. Also, you will have to look at a wide range of funding sources. This review will start with existing and new potential shareholders. You can also look for any government funding or grants for support during COVID and then move into the debt funders such as bank loans or overdrafts, lines of credit, vendor finance, accounts receivable or debtor finance, order financing, equipment financing such as leases, and sale and lease back of assets. At International Business Mentors, we have experienced Melbourne mentors who can help you assess the range of possible funding options that come with varying interest levels, fees and security requirements.
Your recovery from COVID will require extra costs compared with temporary lockdown or skeleton staffing during the COVID escalation. This will be aimed at increasing revenues and customers to drive the needed increase in profitability. The revamped budgets or forecasts will need to be leaner on expenditure than in past years so that costs do not outstrip revenues during the recovery stages. All costs need to be challenged, including unit costs from suppliers, accommodation cost levels and wage levels for all staff. This will focus management on the bottom-line improvements that will be needed to recover successfully. Management must also manage their operational balance sheets, such as reducing inventories and reducing receivables while optimising the use of suppliers’ credit to reduce the need for working capital finance and to improve net cashflow. The forecasts scenarios must build in flexing of cost structures if the volume of revenue is lower or higher than expected.
It’s critical to implement a timetable plan in your revamped strategy to recover from COVID. With help from dedicated business mentors for companies, you can design a timetable to coordinate the effort and timing to implement well. Your timetable will need to detail who will do what (and when) to drive the implementation. No recovery may result if implementation of the refreshed strategy is poor.
Business leaders need to consider contingency plans for any slips back into COVID or another pandemic, or other critical events, emergencies or extreme conditions. The need is to insulate businesses to the fullest extent possible against such future threats. This will involve risk reduction tactics and increasing financial, capacity and people reserves and financial resources against future disasters. You will also need to improve profitability and reduce operational balance sheets in terms of working capital requirements, all of which would also help prepare for funding the future.
The pandemic has taught lessons in adaptability. With help from business mentoring in Melbourne, some businesses in adversely impacted market segments have been able to flex their businesses rapidly in response to their significant revenue downturns. Flexibility is possible in many areas and can include:
With COVID-19 reshaping our world, there’s no denying the need to reshape your business. It’s time to engage our business mentors in Australia to help you adapt to your new competitive landscape. Contact us today to benefit from our experience in mentoring teams and individuals.