How to survive and thrive in the longer term
By: Lisa Mandic
With New Zealand now at Alert Level 1, businesses are focussing on how to survive and thrive in the longer term. Here are some things to consider.
1. Protect and build your cash
In tough times cash is king. Track your cash closely with an accurate, longer term, cashflow forecast. Receive payments faster: some businesses will fail and fail fast. To ensure you are paid quickly, utilise prepayments, deposits, credit card payments, direct debits and prompt debt collection. If you have debt, maintain clear communication with your lender to ensure confidence. Build your cash reserves, there will be many opportunities ahead and those with cash will benefit the most. If cash is tight, then do all you can to protect it and free it up (by reducing inventory for example).
2. Tap into support and expertise
You are not alone; we are all going through this together. In uncertain times we don’t know what we will need, so it’s vital to have a wide support network and a big bag of tools to call on. The EMA, Government, ATEED, Industry organisations, banks, advisors, colleagues, friends, family are all useful resources. Build and utilise your network.
3. Action cost savings
Keep looking for ways to trim costs. We can’t shrink our way to success, so this is not a long-term strategy. Costs savings can help us stay profitable despite lower revenue, and release funds to invest in new opportunities. What can you do without? What can you get cheaper? What can be renegotiated?
4. Review your business model
These are dramatic times, so business as usual tweaks are not enough to thrive. Now is an excellent time to review your business model. (The Business Model Canvas is a useful tool). Consider your whole value chain and your role in it. Who are the end customers? How robust are they, and their needs? What risks and opportunities are in the value chain? How can you create value more efficiently? Who else has these needs? Who else may be thriving in this climate?
5. Work as a team
Your team are likely to be very concerned, so communicate, communicate, communicate. Involve your team in idea generation and review: they will have ideas of cost savings, efficiency improvements and growth opportunities. Ask specific questions to help them contribute effectively. For example, what other products/services would help our top 3 customers? What did you do yesterday that felt like a waste of time? What would help you achieve more in your day? If things are tight, get creative about how you work together, talk to the EMA about options like reduced hours/days, upskilling or available support. Build a climate of surviving and succeeding together.
Think outside the square. Rather than adapt, innovate. What’s happening in your industry around the world? What’s happening in other industries? Which ideas can you take and apply? Technology and globalisation are huge opportunities for innovation.
7. Do the sums
The hard reality is some businesses will not be able to survive with reduced volumes. Others will be able to survive on reduced sales until new opportunities are realised. Do your sums and know your volume thresholds. Involve your accountant if you are unsure. Don’t throw good money after bad. Be honest and maintain your integrity. Don’t take other businesses down by keeping your head in the sand. Know your make or break numbers and go hard to achieve them.
8. Be resilient and agile
Some people will need to walk away from their business which is heart-breaking. Others will survive by working differently. Your skills can always be applied to new opportunities. Many successful businesspeople have experienced business loss or hardship and have achieved great success from learning and redirection. Challenges are what make us stronger and wiser. NZ is uniquely placed to emerge from the Covid19 crisis in a globally strong position. Let’s go hard and smart and see what we can make happen.
By Lisa Mandic Senior Consultant – Activate Management Group Ltd.