In our last issue, Stacey Davies discussed ways businesses could retune their organisations in times of economic uncertainty including understanding customers, preparing for a new competitive landscape and how to put your people first. In part two of this series, Stacey offers more advice about how businesses can go beyond short-term survival.
Raise finance to invest in change
Finance is the engine oil of any company and preparing your business to raise capital could be critical to keeping you on the road to recovery.
During the country’s various lockdowns, businesses looked to improve their cash flow management and focus on day-to-day survival, leaning heavily on government support packages. But longer-term, businesses will need greater liquidity, so raising finance is essential.
Understand what banks are looking for
Being a good bank customer has never been more important for businesses. Banks are being supportive of their existing clients, but most are tightening new lending conditions. Banks want to deal with people who are a pleasure to lend to. They don't like businesses that are short on collateral, explanations for missing budget, or short of business plans.
Having a banker who understands your business, knows where you're going, your critical reasons for being and what your business model is about is key. They love lending to people who are in control, who do what they say they're going to do, and who can articulate their plan.
Prepare your balance sheets and have a good story to tell about your future
Preparation is key to raising finance, but successful applicants will also have a compelling vision for growth in a new business environment.
We encourage clients to prepare by having a well-articulated story, particularly about what the business will look like over the next couple of years as it comes out of COVID.
Businesses that are working on their resilience and recovery plans are identifying the market opportunities and their accompanying investment requirement. Smart businesses are moving ahead of the pack by getting their business and balance sheets ready to take advantage of the situation. Having a robust story about how you are going to adapt to the new paradigms and where the demand is going to be will help you stand apart.
Technology can accelerate a more resilient future for businesses
Technology moved from a growth enabler to a business continuity factor in lockdown. As businesses readjust for the future, it needs to do both, and it is timely to now consider, is it still fit for purpose?
Reassess IT systems for capacity and security
Following rapid adoption of technology in the first phases of the crisis, it now pays to review what measures and systems were put in place and assess whether they are sustainable on a new scale and for new ways of working that allow secure and efficient operations. For example, doing video calls are great, but you've got to make sure it all works and that your bandwidth is adequate going forward.
Consider performing a remote hardware and software audit to ensure that workforces have the necessary tools to perform their jobs over an indefinite period.
Look to automation to execute routine tasks
One aspect of the crisis is the level of pressure staff have come under to fulfil specific routine processes from home while often juggling other commitments. This is where automation through robotics can help. Building automations in a few days can offer real value and allow you to remove pressure from staff. Furthermore, Robotic Process Automation (RPA) can deliver consistent service. Outsourcing the implementation of RPA can be a quick and affordable way of achieving productivity gains.
Use technology to provide you with actionable data
Data has always been critical to business success and keeping up to date with the changing environment. Once transformed into usable information, data is a valuable asset in building resilience and retuning your business when matched with your scenario planning. Ensure that you have the right analytics, dashboards, report sets and data structures to help with decision-making.
Leaders need access to a range of indicators outside their business that will help them find and realise new opportunities, such as a rival facing financial difficulties that may be open to selling. Use sources such as customer insights, employee surveys, information from trade bodies or market analysts to help shape your understanding.
Stay vigilant around cyber security risks
Cyber criminals’ attack surface has become larger due to the increased number of people working from home – the opportunities to hack into company systems, as well as compromise individual employees - will increase. Cyber risks are continually evolving, and businesses face unprecedented security and compliance risks through data leaks as a result of remote working. Businesses must now ensure their cloud systems and infrastructure are secure and that there is clarity as to who is responsible for securing and monitoring them.
Good governance precedes a healthy recovery
Risk management and governance are essential enablers of growth; they are the controls that allow you to accelerate safely.
The global pandemic has provided an enormous shock to businesses and it has fundamentally tested their ability to deal with crisis and disruption.
But those businesses with robust governance and contingency plans were able to respond to disruption more quickly and, in doing so, minimise their exposure to risk and improve their reputations accordingly. As businesses look to the future and attempt new initiatives, a proactive risk and governance approach can successfully deliver innovation and growth.
Start thinking of risk assurance as realising the opportunities
There is often a tendency to look upon risk and governance as solely defensive measures. Often focused on compliance - and aimed at avoiding negative consequences – the benefits of good governance is frequently overlooked.
Good risk management and governance come from appreciating that they are intrinsically linked to new business initiatives and operations – not an afterthought to them. You need to look at the opportunity and cover off the risk management piece that goes with it.
Review your strategy more regularly
In the past, businesses would often develop a plan and perform a refresh and review with the board or management annually, or perhaps quarterly at best. Today, organisations need to do that more regularly. If you don't keep your eye on the ball, someone else will eat your lunch, or the economy takes a dive or government policies change. The pace is fundamentally different and much more tech-driven.
Those thought processes around sense checking your strategy, and your priorities are almost a daily, real-time imperative now. And this is also where technology plays an important part. Businesses need to keep track in real-time through the use of technology. They should embrace powerful tools that distil complexity and provide data through dashboards, such as monitoring highly complex supply chains. Ultimately though, it comes back to human action and decisions and behaviour.
Use this time to check and fix behaviours
Culture is fundamental. If you look at the major frauds and errors, it mostly comes down to poor behaviour, judgement and culture.
A culture audit can bring to the surface some of the beliefs and behaviours within the management teams that enable people to act badly and take unnecessary risks.
Culture is not an accident. You determine the culture you want. And some drivers deliver that around strategy, leadership, people management, and the process within the business so that you hire the right people, you train them the right way, and you reward and promote them in line with the culture you want in the business.
Partner, Business Advisory Services
Grant Thornton New Zealand
T +64 9 922 1291
M +64 21 858 050