Finance: Rebuilding Business
Effective and efficient business leadership and management is the new business tool in navigating through these uncertain time and into the continuing ambiguity. This may very well be the “new normal”. It is not going to be ‘business as usual’ and businesses need to take stock now, forecast and prepare for the months, even years ahead.
The coronavirus pandemic has changed the mindset of the consumer and hence future purchasing habits or the way services are consumed. We may very well have to re-configure entire sectors of the economy such as travel and leisure, entertainment and restaurants.
Focusing on the immediate term:
What should the key focus areas be for businesses in a crisis be? –
- Cashflow Management is a priority– with many businesses unable to generate meaningful cashflow over the last two months, cashflow management becomes extremely critical. The knock on effect in addition will exacerbate liquidity. It is recommended that a twelve-month cashflow forecast be done to determine the requirements of the business and ultimately to determine if the business will generate enough cashflow to continue into the next twelve months. Items to consider include loan and debt management, loan and debt restructuring and debt holidays, extending credit terms to debtors, requesting extended credit terms from creditors and suppliers amongst others.
- Employees – effective management of your workforce is critical. An assessment should be performed on your workforce requirements, e.g. what percentage of the workforce can work remotely for the immediate future and what percentage is critical to be on site. Together with this, new requirements to make both sides work, with a view of understanding how to better manage your employment costs.
- Restructure of operations – management will need to perform a critical assessment of their business operations and determine whether to restructure their business to eliminate non-core, non-profitable and non-essential services, right-sizing of branches and outlets. In addition, a decision must be taken on discretionary and non-essential spend – introduce thresholds and limits.
- Supply chain management – The pandemic has caused significant disruptions to supply chains across the globe and has created major supply chain issues for South African businesses in turn. South Africa is a net importer of goods both raw materials and finished goods, although are significant exporters as well. We will soon start to feel the effects of new legislation imposed by other countries, availability of goods and material as well as the whammy of a depreciating currency and its resultant impact of the cost of goods as well as input costs. Creative alternatives without compromising quality will have a new seat at the table.
How can Usizo Advisory help you?
Usizo Advisory is a multi-disciplinary advisory and consulting business that provides a wide array of services. (See services page)
From a financial and business advisory service offering, we can assist businesses and individuals during these difficult times in the following ways.
- Advising on how to access and assisting with accessing the various stimuli available for individuals and businesses.
- Cashflow management i.e. preparing cashflow projections, forecasts and budgets, including providing an independent review of these.
- Strategy review of business operations, including recommendations for streamlining and optimization of business operations. This can include and the assessment of non-profitable and non-essential operations.
- Strategic and independent opinions on profit maximization through assessing operational efficiency and revenue – focused streams.
- Advising on corporate and debt restructuring as well as assisting with raising additional debt for the business (both short and long term) – this would include assisting with assimilation of supporting documents and communications with financial institutions.