Adapting Your Financial Strategy
Navigating The Crisis Webinar Series
Businesses are facing huge uncertainty and they need to revisit their plans to address this uncertainty and ensure that they can cope with the fallout.
There are three key stages to this process covered by Zac Brech in the ‘Updating your financial strategy’ webinar:
- Ensure that you have a fit for purpose financial model as a starting point. Ensure it is mathematically robust and, crucially, has a full calculation of your month by month projected cash balance. You should fully update it for actual data from your accounting records, client database and other sources.
- Conduct a thorough review of the potential impacts of Covid-19 on your business. Don’t stop at the first order impacts related to the current situation; make sure you have thought through the consequential effects as the country, your clients and your company slowly get back to normal. Quantify these potential impacts and reflect them in a new downside case in your financial model. You are likely to have setbacks in your revenue projections. Perhaps there are extra costs and future fund raisings may be less certain. Make sure that your model clearly tells you whether you would have problems in this downside case and quantifies the scale of these problems. They are most likely to manifest as a funding gap – how big is the gap and when does it occur?
- Use your model to work up a survival strategy. Go through the full range of potential remedies, assess which are realistic and model their effect on your financial position. Using a combination of cost savings, deferral of payments, more imaginative and flexible terms with clients and accessing the various government schemes, you should aim to plug your funding gap. Ideally, your analysis should give you extra headroom so that you will still be OK even if one or two of your measures fall short of expectations.
Working through this process will put you in the best position to get to grips with the challenges raised by the epidemic and allow you to get ahead of the problem.