Corona Revive & Survive
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 of you will have never been exposed to the level of actual and looming financial stress you currently face most of which is out of your control and none of your making.
Reaching this page hopefully means you have qualified for and obtained your appropriate government stimulus assistance and are either still in financial distress and looking for assistance to survive the coming months ahead or looking for a plan to come out the other side in as strong as position as you can.
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.
How it works
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.
- Re- review Covid 19 stimulus package applicability .
- 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 and where appropriate and look for reductions and relaxation of severe terms .
- 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 (aged).
- Alter corporate structure to accommodate protection of Intellectual Property, P&E, Vital Profitable contracts,
- Put in place employment contracts for directors to maximise protection from adverse events in future.
- Restructure any related party debt to maximise recoverability
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
- Develop formalised documentation for stakeholder engagement and management
- 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, desired outcomes.
It is important to emphasise that the earlier you act the more options you have available to you so if this sounds like conversation you would like to have with Tim or one of his team don’t hesitate.