Corona Survive & Thrive
For many businesses owners the Covid crisis is proving to be the most challenging time in their business life.
We have all hit road bumps, but most business owners will have never been exposed to the level of actual and looming financial stress currently faced, most of which is out of your control and none of your making.
If you are in financial distress caused by covid and looking for strategies to survive the coming months ahead. tph can be your partner helping to create a plan to come out the other side. The damage caused to business by covid may be felt long after covid moves out of our news cycle; however, many businesses will struggle to recover without the right planning. tph uses proven methods to provide solutions to help you survive through uncertain times.
Owning a business can be the loneliest place in the world in times of financial distress, so in response to what is a new experience for all of us we have created a unique survival and revival programme specifically designed for SME’s .
It begins with a detailed situation analysis of your position and future outlook. This will identify the good, the bad and the ugly, followed by a multi-scenario road map that outlines what strategies you need to undertake right now to ensure survival, and in the short term to position yourself as best you can for revival. It is to be used as a way to minimise the chance of shut-down or financial collapse.
The situation analysis
Everyone’s situation is different so we take a detailed but rapid assessment of your situation including things like:
- Current financial position
- Budget forecasts and cash flow projections
- Gross margin metrics and overhead coverage
- Debtor and creditor position including ATO
- Finance obligations and arrangements including secured terms and conditions
- Business model and structure
- Current and ongoing customer/client base
- Industry outlook
- Asset valuations going concern vs non-going concern
- Employee obligations and entitlements profile
- Corporate structure and ownership including related entities
- Director personal guarantees, securities,
- Director/Shareholder/Intercompany loan accounts
- Critical employee positions, contracts and personnel suitability to role
- Current and future working capital requirements
- Future funding requirements such as loan facilities
The Road Map
Utilising and analysing the situational analysis information, an assessment is made as to the likelihood of survival and whether a road map can be developed that will maximise the chance of survival and then revival. It’s important to remember that most businesses can be turned around with the right programs and support. An important part is whether the owners actually are prepared to support the program, both financially and in practice. If not, then programs to exit the business with the least amount of damage and risk to the owners can also be developed.
Assuming the required level of ‘buy-in’ from the owners for survival and revival is agreed a survival map is developed that outlines the steps required to ensure short term survival and may include things like:
- Create a plan for survival that critical staff can understand and implement
- Develop realistic cash flow projections.
- Establish daily, weekly, monthly cash flow reporting.
- Alter employee terms and conditions to compliment the basic projections.
- Eliminate unprofitable lines of business.
- Remove unnecessary overheads .
- Apply inventory strategies to reduce holdings .
- Heavy focus on cash collections sales and discounts on daily and weekly basis.
- Prepare realistic game plans for any current or perspective financier.
- Review what creditors are easiest to alter repayment terms .
- Negotiate more favourable repayment terms with creditors where possible.
- Review leasing accommodation terms and conditions, where appropriate, look for reductions to assist the business cash flow.
- Review tactics to defer, alter or eliminate intrusive and unwanted creditor demands
- Defer any unnecessary capital expenditure plans.
- Develop simple and regular information feedback loops for example cash, sales, employee attendance, debtors, creditors
- Explore options to alter the corporate structure to provide protection for company assets that operates within the law and governing guidelines.
- Details and plan the best way to manage Intellectual Property, P&E, Vital contracts.
- Put in place employment contracts for directors to maximise protection from adverse events in future.
- Restructure any related party debt to maximise recoverability
2. Revive and Thrive
The revival road map outlines the steps you need to take now and post survival mode to ensure you can survive and thrive. Things such as:
- Create a plan for the medium to long term future designed to achieve primary objectives
- Establish profit, cash, asset, liability, income, dividend targets for next 6, 12,18 months
- Adopt company-wide thriftiness theme in every area of the business
- Train staff on continued stakeholder engagement and management to ensure appropriate negotiated outcomes are always achieved
- Redefine core business and ensure all programmes are designed to maximise core business
- Develop financial projections data for constant monitoring and adjusted subject to circumstance
- Refocus the business on the medium to longer term to take advantage of opportunities as they arise
- Incentivise all levels of management tied to appropriate results orientated packages
- Introduce and renegotiate more favourable finance arrangements as cash and profitability improve
- Develop corporate structure to ensure maximum flexibility and risk management with respect to the primary operational areas of the business.
- Only ever introduce programmes that enhance the ongoing value of the business and ultimate exit value
- Ensure assets of the business are secured in an appropriate structure to minimise risk of loss in the event of an unexpected catastrophe.
- Develop succession plans for all critical management and staff
- Regularly review ongoing strategies for relevance, achievability, and desired outcomes.
Let’s Formulate your best solution?
Senior Strategy Expert
Restructure, Turnaround & Insolvency
A Fresh Start Begins with a Free Consultation with tph Advisory
When a business goes through difficult times it can feel like you are in a boxing match having gone 10 rounds with banks, landlords and creditors.
tph is in your corner giving you all the tools and expert advice to navigate the best outcomes for all parties. Think of tph as the referee guiding you through, ensuring that all parties play by the rules.
Each situation is unique and requires a tailored approach, we understand there are difficult problems that require creative solutions. That’s the tph difference, experienced practitioners with more than 30 years of knowledge in the industry. That’s how you know you are getting the best advice to transition you and your business.