Re-energising your Business and Financial Resilience out of the Covid 19 Crisis Training Course

It is being widely predicted that the Covid 19 crisis will herald a new global restructuring of the economic order. Capital Economics have estimated that the world will suffer a 15% drop in output whilst other research groups have suggested the figure could be as high as 20%. The prospect of a deep global recession is extremely acute with the evaporation of global trade and consumer spending. There is no doubt that we are facing un-precedented times.

A recent survey by the Office of National Statistics (ONS) found that over 50% of UK businesses only have enough cash to last six months! Debt has become a lifeline, as sales have collapsed. High levels of borrowing could also end up sinking many companies. City UK, a financial lobby group, estimates that small to medium sized businesses will emerge from the crisis with some £105bn of additional debt!

Well before the current crisis, the business models of many companies were either in difficulty or failing. Beales, Carluccio’s, Carphone Warehouse, Debenhams, Flybe, Hertz, Laura Ashley and Virgin Atlantic are just a few that have demonstrated poor organisational and financial resilience. So, as other companies navigate out of the Covid-19 storm many will fail or sail perilously close to failure.

Regardless of the gloom and pessimism we know the business world will survive and move forward. The winning companies of the future will be those populated by leaders who responded to the future, rather than the past. This is a time for abandoning the known and looking to the unknown – it’s a time for powerful conversations!

The Learning Opportunity

The crisis provides enormous opportunities to rethink customer value propositions and business models. We know that within weeks of the crisis starting, companies were abandoning underlying assumptions that they had relied upon for decades. Businesses swiftly circumvented long-term resistance to home working. Long standing internal silos and functional barriers were discarded within weeks. Small businesses moved rapidly to new online delivery channels and models of working. Universities and business schools that zealously clung to traditional classroom learning moved overnight to Zoom lectures. Many businesses stepped up to offer innovative customer value propositions in rapid time. Large and complex businesses enabled their teams of technical experts to collaborate across industrial and market sectors to design and develop new and much needed ventilators for hospitals in record times.

Realising the learning and insights from the crisis to create a new and more agile organisation can only be delivered if leadership teams have the right mindset and behaviours. As ever it will be a combination of hard and soft thinking that will deliver lasting outcomes.

What Strategic Direction Will Your Leadership Group Chart out of the Crisis?

The crisis is already destroying many business models and, in some cases, posing an existential threat to entire industries! So, do you elect to adopt the classic strategy of retrenchment and focus on strong cost and asset containment that reduces your rate of cash burn? An approach that many companies are now taking as a means of survival! Or, do you look to radical opportunities to deconstruct and reshape your business model whilst at the same time exercising prudent and well-judged financial disciplines? In such unique times, the easy option is to simply cut costs, but in the longer term you run a real risk of developing organisational inertia and obsolescence. Our stimulating and challenging three-day programme advocates harnessing the benefits of “creative destruction” with a strong financial compass to help navigate a future course.

We aim to provide a highly interactive roadmap to help your teams identify and navigate their learnings and accelerate out of the crisis.

The Financial Compass

In the years ahead having a strong cash management position will become a critical sign of financial and organisational resilience. For many companies, profitability will have to take a back seat for the near future. In recent times, having a strong cash balance has often been a source of corporate embarrassment. Why can’t you use the cash for better things? What’s wrong with your leadership ambition that you have so much cash? However, in a post Covid world, cash on the Balance Sheet will no longer be seen as a sign of leadership complacency or inefficiency.

Financial resilience will also be based on ‘operational’ gearing rather than the traditional ‘debt gearing’ of

recent decades. Future winning organisations will major on ‘cost effectiveness’ rather than cost reduction. Indeed, avoiding the knee jerk reaction of “slash and burn” will be critical to navigating the medium and long-term path to success. A focus on the strength of the Balance Sheet and the ‘quality’ of cash will be mandatory – new Bond issues, fresh revolving credit facilities (RCF) etc will all

be easier to access in a low interest economy. At the same time there will be a new focus on “operational’ cash’ from trading rather than simply borrowing it! Raising fresh equity rather than increasing the debt pile will be another key strategic discussion point for business leaders.

Who should attend?

• Leadership Teams at all levels – Corporate, Business Unit, Functional – looking to undertake a review of the impact of the crisis on their business or key areas.
• Public Sector and NGO leaders and organisations.
• We believe that the existential nature of the crisis demands “powerful conversations” across all levels of an organisation.

Setting the Scene & Resetting the Compass - Part 1

What’s happened? The Impact of the Crisis on our Business:

• Un-precedented dislocations, disruptions and the evaporation of demand
• Customers, People, Finance, Technology and Operations?
• Competitors – old and new?
• Markets
• Key stakeholders - Society, Government – Notion of “stakeholder capitalism”
• What will our future competitive landscape look like?
• What are the likely future scenarios for our business? – Long Freeze, stalled ignition, fast return to growth?

Setting the Scene & Resetting the Compass - Part 2

What is our Learning?

• The need for powerful conversations at all levels!
• What will be our new normal?
• Avoiding the “more of the same” and “stick to the past” trap
• What was our overall level of organisational resilience and adaptability?
• What specific aspects of our business and organisational model worked well?
• What areas of our business model were exposed and vulnerable?
• Did we identify our “essential,” and “pointless” activities, processes and jobs?
• As a business, and moving forward what can we do faster, bigger and cheaper as a consequence of the crisis?
• How do we create customer value in the future?
• Shifting to a value and digital focus
• Future focus points – society, customers, clients, family and employees

Protecting Financial Profitability & Capital

As we emerge from the global impact of COVID-19, a key focus will be protecting the profitability of businesses. Understanding the bigger picture and continued risks is paramount.

Businesses currently struggling for profitability with unstable cash flows are particularly vulnerable. However, even businesses that appear to be in good financial shape will be subject to what future demand & supply chains will return to in the ‘new normal’.

Businesses of all shapes & sizes will be required to plan, model and pull on a range of operational, financial & strategic levers. Such planning must be made against a background of the capital structure of the business and modelling of any implications.

Key focus areas in this session:

•  The Finance Model for your business
•  The Profit Improvement Model
• Sensitivity & stress testing of key variables
• Operational Gearing & Financial Gearing
• Revisiting the variable & controllable costs
• Making the Fixed Costs variable!
• Break-even concepts
• Relevant & Marginal costing/pricing
• Is your capital structure too dependent on debt?
• Do you have enough liquidity to sustain the business?
• Does Business Risk square with your Financial Risk?
• How should be the business be funded post Covid-19?
• What does the robust Balance Sheet look like?
• The key ratios to focus and measure up on
• Sweating the Assets

The Future Leadership Agenda

We focus on the critical leadership agenda in a post Covid world. We address the importance of leadership mindsets and behaviours along with the need to build trust and go beyond “resilience” to develop new levels of organisational agility.

Calibrating our future direction?

• How did our leadership cadre perform during the crisis?
• The importance of future leadership behaviours and mindsets in navigating the new known / unknown
• The abundance v scarcity mindset
• The dangers of “unbounded optimism” and the need for leadership transparency
• The critical issue of TRUST – Staff and all other Stakeholders
• Servant Leadership and the challenge of a new employee agenda
• The challenge of re-engagement – Refocusing people on the fundamentals but also the future

The People & Organisation Component

This module we focus on the issue of people capability and the key challenges that result from the crisis. The session will focus on some of the key actions that need to be taken to create an engaged workforce in a post Covid world.

• What did we learn about our people capability from the crisis?
• Who proved resilient, adaptable and agile?
• What talent emerged during the crisis?
• Dealing with the “survivor and victim” syndrome
• Where did we have real challenges in terms of skill gaps and resources?
• The key challenge of Re-engagement & Trust Building
  • The challenge of returning to “normality”
  • The Transparency Priority
  • Immediate people actions – acknowledgement and reward
  • Inspiring a new sense of innovation and agility
• The role of HR and L&D in reskilling and developing a new individualised approach to people engagement and a new workforce – employees, freelancers, gig economy workers

Resilient Cash Management

Cash is King! Underpinning, financial resilience is the need for a strong focus on working capital management and maintaining the right level of cash flow. In many organisations cash management takes priority over profitability. In this module we focus on critical ways to unlock cash, both in terms of quick wins and long-term sustainability.

Account Receivables & Receivables

• Payment performance & behaviours – current position
• Proven ways of improving collection performance
• Financial status of key clients – key ratios
• Credit policy and terms of payment
• Erosion of profit margins through payment delay - model
• Early payment discounts
• Factoring & invoice discounting – pros & cons

Inventories

• The cost of dead capital
• Consignment stocking
• Safety stocks & stock-out costs
• Obsolescence policy
• Demand/Supply forecasting

Cash to Cash Cycle & Forecasting

• Map the cycle - the ‘cash to cash’ dashboard
• Benchmarking with competitors
• Sensitivity analysis & stress testing
• Liquidity ratios & lending covenants
• Cash conversion %

Programme Summary & Call to Action

In this closing session we will summarise the key learning from the programme and consolidate with participants’ key reflections and return to work, “To Do” Actions.