Business Re-boot Considerations
The COVID crisis has been an enormous strain on many businesses and many are looking at plans to ‘reboot’. Here are some thoughts from Trinity Bridge Asia on the five key aspects that you should consider when preparing such a plan.
- Most importantly there needs to strategic alignment. The mission, objectives and company strategy need to be agreed, understood and communicated. It is vital to ensure that all the stakeholders are pulling in the same direction but it also gives staff and customers a roadmap and a sense that there is a positive destination (‘light at the end of the tunnel’), the core of which must be honestly identifying what has gone wrong in the past.
- A reboot plan is a long-term play, but it needs to be divided into at least three distinct phases: a 100-day remedial action phase; a six-month stabilisation phase and a two to three-year growth phase. That needs proper project management.
- Capital is king, therefore cost cutting is inevitable but it is important that you focus on the big ticket items which are normally staff, space and IT. Capital expenditure is often immediately targeted for cuts or is stopped completely. This is can be short sighted. The plan should identify the areas (new products) that will help the reboot and double down on those prospects. Once again this has the added advantage of sending the right message that the management team expect to return to growth. Unfortunately, redundancies are often necessary. Our strong recommendation that if you have the time go with a voluntary scheme initially.
- Regular communication is needed to stakeholders and a member of the senior management team needs to be specifically tasked with communicating with staff (HR Manager); creditors (CFO); customers (Head of Sales) and shareholders (CEO). The creditors are often the most important short-term target for active engagement. Do not ignore them. Generally, creditors see the advantages of working with the reboot project as the last thing they want is a business been wound up. Management are sometimes afraid to engage with creditors as they think it might prompt a legal action but that is typically the exact opposite of what happens. Silence forces the legal process. Creditors want to ensure that they are being treated equitably. This is especially true of financial institutions and banks.
- It is critical that the progress on the project reboot is measured and analysed. Some obvious financial factors include day sales outstanding, debt coverage/leverage, liquidity ratio but other non-financial measures are important including coverage in the pipeline and staff turnover for example. A financial controls audit or health-check is also a good idea. And hire a good credit controller to improve your collections.
Finally, remember that ‘this too shall pass’: with a motivated management team, an aligned strategy, with regular and proactive communication it is more than possible to reboot a business.