The Coronavirus pandemic has incited a worldwide financial crisis, and over the last few years, companies such as Thomas Cook, Alitalia, and Debenhams have been seen to meet numerous financial and legal difficulties. If Covid-19 has taught firms anything, it is that implementing strategies which will help mitigate the devastating effects of unprecedented financial ruin are imperative for their survival. However, financial crisis’ in business also occur internally, so companies must be prepared for the precedented and the unprecedented. Therefore, it is vital that there is a crisis response in place, and senior officials are on the lookout for potential warning signs from within. Here are our top actions and strategies to take when a financial crisis impacts your business.
Be self-aware and know your business inside out
We believe the key to success when restructuring is mindset. Knowing your business like the back of your hand is the first step to risk and crisis management. A strong management team should have accurate information of the business’ expenses, their budget, sales strategies, and cash flow. Being well versed in the operations of the company puts you in in the position to analyse the business and challenge yourself with difficult questions. It is vital to be self-aware of the companies flaws and engage in solutions and analysis with an open mind. One of the most common reasons for company failure is inertia – where businesses are resistant to change and narrow in their thinking and strategies. Restructuring is therefore key to mitigating internal crises and reacting to external ones.
Every business is different so a one-size-fits-all guide cannot be made, which is why we emphasise that those in managerial positions should have excellent business acumen. However, certain question to consider may be; what is making money and what isn’t? Why didn’t team X working efficiently under management Y? Are the policies and ethics of the company up to scratch? When affected by an unprecedented crisis, a more reactionary and bold approach may be taken where you look to reduce nonessential costs, switch to automatic systems, and change the way you budget in a way which prioritises profit.
Ask for help
Business’ no matter their size, should not be afraid to seek legal advice in crisis management. As a senior in a business setting, the expertise of a legal advisor should be valued. Although you may worry about costs, your legal advisor will work with you to solve questions you have asked yourself in the analysis of your business. `In the long run, the cost of preventing financial crisis will outweigh those of legal bills.
Saving your business when financial difficulties strike takes meticulous planning, incremental change, and an open mind.