The pandemic has brought exceptional times. Faced with business uncertainty, leaders need to utilise everything they can to deal with the challenges they face. This includes redefining strategies, adjusting business processes and employing new tools and systems.
If your business is viable but at risk, follow these three steps to manage uncertainty in these trying times. They will help you realign your approach and drive your business forward to the opportunities that lie ahead once the global crisis ends.
1. Situational Analysis
Any good strategy always starts with taking stock of your current situation. Then, once you have visibility over the state of your affairs, you can plan what needs to change and how.
So, what are the challenges you might be facing? Whatever the cause, in business, the over-riding measure is always a financial one. So, check to see what your finances look like – what are your resources, liabilities and outstanding receivables?
If you’ve suffered a fall in demand for your products or services, or there has been a disruption within your supply chain, then you are going to be short of capital to draw on. In normal times, this is not helpful. But in these crisis times, it is even more critical that you are sure you have sufficient cashflow or financial reserves to ensure liquidity.
Now is not the time to build in flexibility ‘just in case’. It’s better to have the visibility to see what you are dealing with, then your plans will be more accurate and you can be certain that you are taking the best steps to minimise any risks. Instead, make a careful assessment of the cash you have and what you’ll need to sustain your business for a number of timeframes.
The results will determine the steps you may need to take next to manage uncertainty and safeguard the viability of your business.
2. Establish Your Priorities
The objective of this stage is to take control of what you can. This is done first by determining your priorities. You should look at your processes, people and performance.
In terms of processes, you need to tighten control over everything possible. There should be no leeway on expenditure and no slipping of efficiency. To manage uncertainty, you may want to reduce your budgeting timeframes, so that you are concentrating on the short-term rather than the next year or three years. You need to run a tight ship so that you can meet the priorities of cutting costs, paying staff, and ensuring you maintain liquidity.
See what changes you can make that will improve your short-term finances – by cutting costs, enhancing productivity. This might include reviewing objectives and budgets so that you avoid spending on future projects that may not happen. Implementing new, tighter approvals processes can avert unnecessary expenditure and staying on top of payments from customers can ensure better liquidity.
To ensure you’re running at peak performance, it is wise to monitor your KPIs. Keeping track in real-time of any slippage from your goals allows you to act more quickly. Then you can prevent further damage and implement changes that will turn things around.
KPIs you might want to check and optimise include: days sales outstanding (DSO); cycle time (if you’re a production-based business); time to close; gross margin; customer satisfaction; and costs to revenue ratio.
Finally, your people are vital. You need to keep them up to speed with what’s happening so that you engender their loyalty and support. This involves communicating clearly and frequently with them about the situation. When things are tough, there is a greater likelihood that you can rely on your staff to pull together if they are apprised of the circumstances. Staff will reward your honesty and transparency and your actions will foster greater productivity, engagement, and a sense of belonging. This can reduce staff turnover, helping you to retain your valued employees.
If the crisis means that your immediate priorities mean that you absolutely must cut staffing costs, then consider reducing hours or implementing work-sharing, or extend your use of furlough. This is preferable to making staff redundant.
3. Make the Changes
The final stage is to implement any changes that will enable you to bridge the current crisis and come out the other side.
This involves being creative and building agility. Once you understand your position and the short-term issues you need to navigate, you need to creatively find ways of tackling things. Consider how you can position the business so that it has the best chance of enduring the current difficulties. Then, once the situation improves, you can position for growth and prosperity once again.
This might mean you have to reformulate products and services or reorganise the business to ensure optimal productivity. Perhaps crowd-source ideas for initiatives from your employees. You might be able to create new bundles and packages, add a freemium option or implement new business models, such as subscriptions or leasing. You could run different pricing models to estimate if sales might improve under various scenarios and investigate new markets or gaps your offerings can fill.
You will need to be agile to successfully achieve the changes. Speed and flexibility are important. Being adaptable enough to drive the transformation will see you become more productive and profitable and will deliver sufficient competitive advantage that you can succeed.
How NetSuite Can Help
NetSuite gives your staff the flexibility to work from anywhere. With real-time insights, you gain clarity about your situation, can measure and monitor KPIs and can clearly assess your financial performance. NetSuite empowers you by providing the data you need to make smarter decisions, more quickly. It can help you better manage uncertainty, allowing you to take control of your business’ s future.
For a free business consultation or a tailored quote, book an appointment today or get in touch. Our team of certified consultants can also recommend government lucrative grants and initiatives that you may not be aware of.