The resurgence of the Covid-19 threat to businesses – similar to the devastating lockdown a few months ago – is looming owing to the second wave of infections, with KZN being identified as the third highest risk area behind Gauteng and the Eastern Cape.
The key for businesses operating in the Zululand area is operational agility, which is critical for business survival.
The two core areas that need focus are related to financial management and strategic management activities.
In regard to the financial management focus, businesses have already experienced the worst over the March-May lockdown period.
By reviewing and analysing the financial statements, cash flows and profit and loss from that period, they are already aware of what problems could arise and can take corrective action now, should much more severe forms of the lockdown be imposed on us in the near future should KZN become a Covid-19 epicentre.
In particular, some of the financial management related tasks they can engage in include: calculating key ratios from the financial statements such as working capital ratio and stock turnover ratio; make cash flow forecasts and monitor closely ongoing cash positions; and review purchasing policy to prevent overspending on stock.
They must develop strategies to address future cash shortages, for example by identifying less essential expenses that could be reduced or temporarily delayed, such as travel and marketing.
They must also assess how long the business can continue before future cash flows turn negative and identify new and enhance existing product lines/services that are popular to increase ongoing cash flows.
Every effort to engage with one’s bank manager to secure some form of debt relief or an overdraft facility must be made.
Additionally, businesses must explore the types of Solidarity grants, subsidies or loans are available and the eligibility requirements.
Furthermore, seek out options to defer or renegotiate financial payments, e.g. smaller instalments, payment discounts or lengthened payment terms with both banks, creditors and landlords.
From a strategic management position, ensure the health and safety of staff and clients. Where possible provide the necessary IT and training support for staff to work from home or incorporate flexible working hours.
Use the current conditions to transform one’s business for the future with the appropriate staff and technology mix.
Provide leadership and communicate future plans with staff. Build trust and morale and inspire staff to be creative, innovative and to suggest ideas that will assist the business to survive.
Communicate regularly with staff and arrange social gatherings either online or Covid-19 compliant live events.
Maintain customer relations by taking care of their needs during these difficult times, make acceptable payment arrangements, and offer products and services that are sensitive to the Covid-19 circumstances.
Utilise digital technology to communicate with clients. Equally, a business must take care of its supplier relations in a similar vein.
Much of the above has most likely been done already, but it is imperative that businesses do a SWOT analysis to continuously tweak and update their strategic and financial management activities and operations.
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