3 Areas to Help Businesses Manage Through, and Beyond, a Crisis– March 16, 2021 by Jim Boland

When there is a significant shift in business operations due to a crisis — whether a health pandemic or natural disaster — deliberate leadership is critical not only to survival but also to drive positive outcomes when the crisis abates.

Business leaders should address three key areas — cash management and liquidity, organizational design and digital trans¬formation — as they manage out of crisis mode and into their new normal.

1. Know Where You Stand in Terms of Liquidity

In the face of adversity, business leaders need to rapidly take a long, hard look at liquidity. The key is to imme¬diately get better visibility and control over cash.

  • Analyze Your Current Position. Access your company’s data to answer key questions, such as: How much liquidity is available? What do key liquidity ratios look like, and how much risk is there? Which assets can become liquid quickly? What are the daily/weekly cash needs to fund oper¬ations, and how can we best manage them?
  • Project the Future. Using pro forma modeling to stress test different scenarios can provide vital information, addressing questions such as: How will future events impact the company’s liquidity position? What actions can the business take now to see benefits in future periods? What are financing needs, and when should we inject liquidity? Understanding your company’s position today and tomorrow will help in the future.

>> Read our blog on zero based budgets and rolling forecasts

  • Create an Action Plan. It’s important to develop a top down strategy and tactical action plan and clearly communicate it across the enterprise. Consider revising policies and processes geared toward addressing indirect spend, receivables, payables, automation solutions, and consolidation of and renegotiation with vendors.
  • Roll Out and Implement Your Plan. Before making sweeping changes, define the communications plan to get the team on board. Design specific plans for stakeholders based on the projected impact, communicate regularly and define roles and accountability.
  • Manage and Track. Cash management solutions tend to be scalable and deliver value even as the business environ¬ment changes and reverts to growth mode. Manage, track and report metrics regularly and communicate them across the organization; establish a culture adaptable and accountable to cash management best practices; and leverage external expertise to help build the needed systems and processes.

“It’s important to project liquidity needs and risks over the next 12 to 16 weeks,” says John Cavalier, partner in Cohen & Company’s Management Consulting Group. “Having the best information will directly inform the magnitude of change needed, and often leads to best practices.”

>> Read our blog on cash management

2. Do More with Less by Streamlining Your Organizational Structure

A well-designed organizational model can streamline how work gets done and help ensure changes made to resources now won’t cripple your company in the future.

  • Focus on Roles, Not Specific People. Consider what roles you will need across the orga¬nization, regardless of current staffing. This will help you think beyond the current talent pool and be ready even if an employee decides to leave.
  • Embrace Digital Transformation. Restructuring with digital in mind means the business is built to easily “bolt on” new methods, including automation, business process management, working remotely with offshore resources, third party SaaS solutions and more.
  • Go “Global” in the Service Delivery Model. While it may be tempting to reduce field teams and stretch back-office spend, ensure roles responsible for data and making decisions locally aren’t unnec¬essarily hamstrung by a bureaucratic structure. Certain functions, such as sales or production scheduling, can suffer from being too far removed from conditions on the ground.
  • Balance Efficiency with Flexibility. Companies must stay nimble and adaptable. Create smaller teams with cross-functional and end-to-end process authority and accountability. While this structure shifts away from assembly line type efficiency, it is highly outcome driven.
  • Maintain Key Nexus Points. While some headcount reduction may be needed in the short-term, be careful where those cuts occur. Be mindful about eliminating positions that serve as pivot points between functions, for example, analytics teams that bridge traditional IT and operations groups. Often, these valuable resources can flex into other work while also having signifi¬cant impact within the networks they touch.

“Take this opportunity to reevaluate where and how work gets done,” says Mary Washburn, a senior manager in the Management Consulting Group. “Modernizing the organizational model can help companies come out of this crisis better equipped."

>> Read our blog on organizational change

3. Beyond ‘Work from Home Ready’

While digital transformation isn’t new, a new frontier of technology is reinventing the workplace. Deploying thoughtful digital strategies and tactics throughout a company can enhance the business going forward and offer seemingly endless possibilities.

  • Achieve Agility & Efficiency. Digital strategies not only streamline processes but enhance the customer experience by delivering products and services in real-time and on-demand. This also offers enhanced abilities to manage selling as well as general and administrative costs.
  • Create an Integrated Community. Transforming the workplace means streamlined communication and interactions across the entire enterprise, closer interaction with customers, and the chance to create a more growth and develop¬ment focused employee culture.
  • Realize Differentiating Capabilities. Digital is about more than streamlining operations. It can also help businesses achieve integrated, holistic decision making, and build the culture and processes that seamlessly support the integration of employees with digital resources.
  • Make Better Decisions. Businesses that embrace digital transformation will have the enhanced ability to solve current and future business problems and accelerate idea incu¬bation into execution.

As enterprises invest more heavily in transforming customer facing systems, success has been directly tied to back-office investment. The biggest key to success is to design and execute digital solutions that integrate both customer-facing and back-office processes.

Jim Boland, partner-in-charge of advisory for Cohen & Company, emphasizes why now may be the perfect time for a reset. “The challenges businesses are dealing with in the face of uncertainty can serve as a foundation for exploring new ways to protect and grow the business in the future.”

>> Read our blog on the need for digital transformation

>> Access Resources for Optimizing Cash Flow and Liquidity. Download our toolkit for tips to manage your cash during challenging times, including the PowerBI Liquidity Dashboard and 13-week Excel-based Cash Management Model.

Contact Jim Boland at jboland@cohenconsulting.com, John Cavalier at jcavalier@cohenconsulting.com or Mary Washburn at mwashburn@cohenconsulting.com to discuss these and other transformational strategies for your business.

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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.