Enterprise leaders face unprecedented budget pressure as the Covid-19 pandemic continues, but that urgency only increases the need to assess all cost decisions strategically. What decisions should be made? Is there a trade-off in that decision between the level of effort required and the amount of benefit that could be gained? Are there big expense areas that should be the areas to focus effort, or should the cost-cutting measures be evenly distributed across the organization? These are some decisions that corporate leaders could be faced with. The survival of their organization may depend on the decisions.
Covid-19 has created financial hardship for a lot of businesses. What businesses should do is think about how they will come out of this. To do so, there are a number of steps that could be taken.
1. Assess your situation – Look/relook at your P&L and cash flow to understand what impact the pandemic may have had. Before you can understand what you would need to do to rebuild, you need to understand what you may be rebuilding from. Consider revenue, costs, customers and employees.
2. Reassess your plan – Make sure you understand if your business would need to pivot to adapt to the new normal. Understanding how your industry may have been affected or will change would be helpful in identifying new opportunities. Readjust your company’s goals and targets, if it is necessary to do so.
3. Understand your financial needs – If money may be needed for the recovery, then consider where some of those funds would come from. Some options could be loan, line of credit, cash advances, merger for cash, or some form of financing. Some may be available option and some may not. Some may also be better than others for your situation, so consider them carefully.
4. Readjust your budget – You may need to spend and you may need to cut some costs. If you were forced to lay off some people earlier, you may need to factor in rehiring and retraining costs. If you would be making less revenue, you may need to make some cuts in expenses. You want to give yourself the best chance for recovery.
Now and in the future, successful businesses will be those that meet the needs of as many people as possible, utilize as few resources as possible and engage and are responsive to as many stakeholders as possible. This is not only the right thing to do but the smart thing to do. Business simply cannot thrive in a world of poverty, inequality, unrest and environmental stress. Protect your business now and create one that will endure into the future.