The upcoming weeks are going to be critical for companies that are in bad financial situations, that are willing to expand and/or currently expanding. Below we have listed a couple of advice that could save your company in such critical times. For more information regarding the said advice or adapting this advice to your company, do not hesitate to contact us!
1 - Control your operational costs
Optimize your resources! Indeed, in these crucial times, your financial performance is scrutinized by banks, investors and some suppliers hence, the importance to be efficient for profitability. Compare, when possible, the supplier price with other suppliers that can manufacture a similar or better product/ service to picture how you are doing in your procurement strategy. Consider as well the number of times you utilize the product! Saving 1% off a product can seem negligible unless you accumulate it 1,000 times.
2 - Be efficient in your commercial strategy and/or your production process
Being efficient doesn't mean working 24/7 or buying at the most affordable price! It means avoid "time-waste" in an activity that doesn't have an important ROI or that doesn't differentiate you from your competitors or makes your production lead time longer. Having shorter supply chains (try to favour local suppliers when possible) and a production process allowing flexibility (adapting to demand) and agility (being able to increase your production time without increasing your production capacity) will make your company more efficient. Have fewer clients per week might allow you to be more productive and produce more throughout the year, it all depends on your production capacity!
3 - Look at other revenue streams and focus on activities that makes your company valuable
Can your product be used in other sectors or in any other way without modification? What value does it have? Managers have trouble identifying their added value, even if it would differentiate from your competitors and yield a higher ROI.
4 - Ask for public funds but don't count on it
Most countries have implemented public support and this can help your company survive for a longer time. Even if it can help your company, do not count on it and consider other revenue streams as, unfortunately, these public funds can take a long time to receive and may not align with your planning. Other funds can also be found such as crowdfunding if you have high customer loyalty or by selling shares from your companies. Ultimately, and as a last resource, you can look at internal resources. Do not forget that most banks require a certain reserve to give loans if needed!
5 - Prepare
It should now be clear that lockdown-induced closures aren’t a short-term threat: as long as COVID isn’t contained, governments will be prone to take drastic measures to preserve the health of the population. Look to the long-run and take measures to increase your business’ resilience to future crises: rethink your supply chain (check our article about this on our blog), consider the source of your capital and the conditions attached to it, and go digital. The next decade is set to be filled with economic, social, and political uncertainties: prepare your business for success by anticipating future crises and consider your vulnerabilities.
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Article written by SEPEC Consults SAS.