Business Continuity Amid COVID-19 Outbreak

Updated: June 25, 2020 | 4 minute read

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COVID-19 declared as a pandemic by the World Health Organisation on 12th March 2020, has put economies, governments, businesses, as well as families, into facing a plethora of challenges and uncertainties, negatively impacting them to different scales. 

The world has been witnessing difficult times wherein all units of the society are being pushed to reassess their needs, purpose and capacities at the shortest time possible for immediate survival and long-term sustainability.

Now is the time to realign focus, dedicate the resources to the cause and strengthen the organisation.

The urgency and the complexity of the matter require that businesses designate specific people, from various departments of the organisation, to oversee and lead the enterprise through this period.

The ideal response the team needs to adopt in such circumstances is four-pronged, allowing a holistic round-up of business criticalities. This approach allows businesses to mitigate the immediate, short-term risks and provides the foundations for long-term business continuity in the face of a looming economic recession. The pillars of this approach consist of:

  1. Workforce;

  2. Operations;

  3. Financial stress management; and

  4. Business identity.

1st Pillar: Workforce

Companies typically invest large sums of money in their workforce, in terms of recruitment, induction, training and also in salaries. COVID-19 requires an immediate response to the protection and safety of the workforce. 

To safeguard this investment, companies need to devise plans for remote-working, shift rotation, tiering staff into critical and non-critical staff or other appropriate organisational plans which allow for business continuity with the minimal disruptions. The plans need to be continuously monitored and adapted according to demand for goods and services, available and healthy staff members and the availability of operating cash.

At this juncture, it is also important to revisit the skills base which the current team has and consider any requirements from training or upskilling to meet current or impending needs.

In all circumstances, the workforce needs to be engaged with continuous communication.

2nd Pillar: Operations

In addition to the workforce, businesses need to address their supply chain and customer base. This is required to identify issues which might impede the business from fulfilling its contractual, legal and business obligations. This might entail making new logistical arrangements for the supply of raw materials, changing insurance policies to cover new operational strategies, or renegotiating deliverables and time frames with clients. Additionally, communicating with all key stakeholders is critical in the process to retain trust and value.

The assessment of operations shall also be wide enough to allow for the discovery of complementing or replacement services or goods which may be offered in a COVID-19 situation and beyond. 

3rd Pillar: Financial Stress Management

Both in light of shortages in the supply chain and reduced consumer confidence; The COVID-19 crisis has brought about reduced operations and financial strain on the business. 

Concerning that, we recommend addressing the following:

  • Identifying the working capital requirement

Based on the workforce and other operational assessments undertaken previously, we recommend a thorough analysis of working capital requirements. More specifically identifying gaps in payments (disbursements) and collections (revenues), inventory management and minimizing the burden on the working capital. With the ultimate goal being the financial health of the organisation to prevent any short- or long-term financial implications.

  • Cash flow management

Concerning the above, it is of utmost importance for organisations to monitor liquidity. We recommend that businesses monitor their financial health by identifying gaps in cash inflows and outflows, taking into consideration the implications of the current and future global scenario. This will include the revision of budgets and variance analysis, the optimisation of cash flow and analysis of contingent credit facilities. 

  • Tapping in new sources of funds

This allows businesses to uncover needs for bank loan moratoria, new loans, the renegotiation of overdrafts whilst tapping into any available Government assistance.

4th Pillar: Business Identity

The new COVID-19 reality is a period of redefinition of purpose & scope and re-evaluation of the business identity. 

With several clients being home-bound, unable to travel and unable to complete projected foreign direct investments; The customer patterns are bound to change and fast. 

Businesses are to be mindful of their relevance in the market, the threats to their brand and the opportunities which may exist in short and/or long-term. 

With regards to that, top management and their advisors, should analyse the business’ strategy, mission and vision, evaluate services/product offering and marketing mix. Along with the new product or service lines, businesses might consider divestments to break away from non-core and non-value-adding lines of business, thereby enhancing stability and focus on primary operations.

Looking outwards from the business, sharp focus is also imperative at this stage for the identification of bold transaction opportunities such as mergers and acquisitions (M&As), consolidations, purchase of assets and management acquisitions, that may be deemed fit for an organisation to keep thriving. 

These transactions allow for enterprises to create more value, simplify and synergise their operations, increase market share and diversify for higher growth products or markets, diversify risk, maximise wealth and promote strategic realignment and technological change.

Looking to the Future

While weathering the immediacy of the current storm is vital, enterprises need to be strongly equipped to face any new upcoming storm. In this spirit, we recommend our clients to adopt risk mitigation plans and business continuity plans, which would immediately kick in when faced with adverse and unplanned realities.

We, at Nexia BT, remain focused on providing sound advice you and your teams require in such endearing circumstances. We are here to help you make sense of the situation, assist you in establishing your immediate priorities, as identified above, and enable the development of new ideas and concepts to allow your business to retain and grow its value.

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