How businesses recover
Lockdown in New Zealand had almost started to feel like a surreal part of 2020 history, when a second wave of COVID-19 hit our biggest city. With Auckland in lockdown again the impact is being felt throughout the country. During this second, and potentially not final, suspension of business as usual, what steps can be taken to start the recovery and return to 'normal' business?
It’s great for eTrade to get up and running, and to be working with our clients again. Small to medium sized businesses have been seeing the benefits of eTrade through:
- adding tools that support working remotely
- being strategic about where to put their negotiation efforts
- improving their bottom line through successfully negotiating lower prices
Impact on business confidence
However, this second wave of Covid-19 to hit Auckland is an unwelcome reminder that the disruptions facing businesses will continue to create significant challenges. ANZ’s business confidence indicator shows the effect this is having on business sentiment.
The dip in confidence is not surprising given the decrease in revenue companies have experienced. Vero’s June 2020 survey that found 71% of SMEs’ revenue took a hit from the pandemic, and 39% are struggling to make ends meet. Xero also revealed a year-on-year decrease in revenue of 34% in small businesses’ revenue during April 2020.
Managing cash flows
Deloitte and PWC continue to produce great insight reports into the impact of Covid-19 and how businesses can position themselves to manage through the crisis and economic headwinds.
Its report on the impact of Covid-19 on business (Deloitte: business-impact-us-covid-19) identifies 3 key things that businesses need to do, starting with cash flow management.
Deloitte recommends that businesses:
- assess their cash flow requirements to prepare for the uncertain times,
- create different (including worst case) scenarios, work out what the appropriate actions
- assess potential risks to their customer base and supplier network.
Leaders need to shift the mindset of their teams from “today” to “tomorrow,” which involves several changes that have important implications for the path to recovery.
Priorities for CFOs and finance leaders
Deloitte gives some further insights into what this means for businesses in their article: Deloitte: 6-imperatives-for-CFOs. They identify 6 key things for CFOs to focus on:
- Preparing for disruption to your workforce and ‘virtualising’ your organization. Provide the resources your staff need and make sure your organisation can continue to operate effectively through social distancing or remote working.
- Bolstering liquidity by managing short-term credit, cash, and performance needs.
- Communicating frequently with critical stakeholders.
- Driving operational improvements through:
- reducing costs
- rationalising and diversifying procurement
- negotiating new contracts
- ensuring your pricing strategy aligns with your company’s new strategy.
- Manage risks.
Plan for recovery post the COVID-19 crisis.
- Consider different operating models.
- Make sure critical talent needs are filled.
- Digital transformation to better meet future needs.
Deloitte’s analysis of high-performing companies that navigated prior recessions found that most:
- continued to innovate,
- introduce new products,
- and position products and services for growth.
It is clear that we must now prepare for a new normal. Businesses are required to work in an environment where their staff and their stakeholders are increasingly working at home, are required to be social distanced, or are operating in different states of lockdown. These unprecedented and challenging issues require us to apply new tools. eTrade Procurement’s
2 PWC’s survey found companies are embracing new ways of working, with 52% reporting that they plan to make remote work a permanent option for roles that allow, and 52% saying they plan to improve the remote working experience. It also found that 36% are considering their distribution channels (e.g., changing from in-person to virtual sales or delivery)
new negotiation platform enables buyers and suppliers to negotiate to reduce costs, streamline negotiation processes and to save time for both buyers and suppliers.