Rising to the challenge of post-pandemic planning

With coro­n­avirus restric­tions eas­ing in some coun­tries and tight­en­ing in oth­ers, chief finan­cial offi­cers (CFOs) face tough choic­es between shoring up finances, guard­ing against future shocks and invest­ing for post-pan­dem­ic growth. But they are devel­op­ing some high­ly flex­i­ble tools and approach­es to help them bal­ance these con­flict­ing needs.

Cor­po­rate share prices have expe­ri­enced height­ened volatil­i­ty for more than a year. Eco­nom­ic uncer­tain­ty con­tin­ues and could eas­i­ly surge as the bumpy ride out of the pan­dem­ic con­tin­ues. 

Com­pa­nies face dif­fer­ent threats and oppor­tu­ni­ties. But those that have embraced dig­i­tal trans­for­ma­tion with care­ful, data-led plan­ning and analy­sis have been agile enough to sur­vive the past 12 months in good shape and have the best chance of grasp­ing post-pan­dem­ic oppor­tu­ni­ties.

In the past 12 months, many have adapt­ed to new prod­ucts and ser­vices, such as home deliv­ery or live stream­ing gym work­outs, that could become sta­ple rev­enue streams. They are now look­ing at how to sus­tain these prof­itably as nor­mal­i­ty returns, by expand­ing sys­tems, train­ing and exter­nal part­ners.

Organ­i­sa­tions are also like­ly to be reassess­ing their entire port­fo­lio of prod­ucts and ser­vices in light of the chang­ing mar­ket vari­ables they may face post-pan­dem­ic. This will include thor­ough cost and prof­it analy­sis, and sce­nario plan­ning over dif­fer­ent timescales for each, to get a clear­er idea of where to focus invest­ment dur­ing the next few months.

Building resilience

Despite the chal­lenges, CFOs have some use­ful tools at their dis­pos­al, not least of which is low inter­est rates. 

Matthew Need­ham, an expe­ri­enced CFO and direc­tor of con­sul­tan­cy The Big Red Toma­to Com­pa­ny, says it is tempt­ing to min­imise cash in times of low rates and invest more, espe­cial­ly as economies rebound. But the con­tin­ued uncer­tain­ty means it may be bet­ter to rebuild cash reserves first.

“Busi­ness­es with cash do not go bust,” says Need­ham. “Try to rebuild enough to cov­er three to twelve months of expens­es.”

Any­thing above that can add to the safe­ty mar­gin or increase abil­i­ty to invest in post-pan­dem­ic oppor­tu­ni­ties such as new prod­ucts or acqui­si­tions.

Over the past 12 months, tech­no­log­i­cal capa­bil­i­ty has been cru­cial in help­ing many com­pa­nies improve agili­ty and man­age waver­ing demand. 

For exam­ple, some man­u­fac­tur­ing com­pa­nies have com­plet­ed dig­i­tal projects, in areas such as sys­tems inte­gra­tion, robot­ics, dig­i­tal twin­ning and intel­li­gent automa­tion, that enable them to flex pro­duc­tion in new ways. Don­na Edwards, man­ag­ing direc­tor for busi­ness sup­port and busi­ness finance at The Growth Com­pa­ny, says this has helped many realise they had more capac­i­ty than they thought.

Across sec­tors, com­pa­nies have also used data-analy­sis tech­niques to help pre­dict demand and bet­ter con­trol capac­i­ty. CFOs and finance teams with advanced ana­lyt­i­cal skills can play a piv­otal role in these projects, re-empha­sis­ing their impor­tance and rel­e­vance in the busi­ness. Those who have yet to adopt such skills may strug­gle to cope with con­tin­ued uncer­tain­ty post-pan­dem­ic. 

Using savings

Some CFOs are re-emerg­ing from the COVID cri­sis with sig­nif­i­cant­ly reduced costs in areas such as trans­port and rent due to trav­el restric­tions and clos­ing or down­siz­ing offices.

Edwards says: “Com­pa­nies have proved they can run things remote­ly and flex­i­bly; even sales meet­ings have worked remote­ly for many.”

Chris Orte­ga, direc­tor of finance, Amer­i­c­as, at mar­ket­ing plat­form Emarsys, points out: “Com­pa­nies have new cost base­lines after the pan­dem­ic. How do we main­tain those sav­ings and use them to devel­op brand aware­ness when we can’t go to trade shows or trav­el to sales meet­ings? We don’t have to be the ‘num­ber police’ because we’ve built sav­ings. But we do have to find new and cre­ative ways to grow the top line.”

One way to do this is through data analy­sis that uses the widest range of inter­nal and exter­nal data pos­si­ble to hone exist­ing mar­kets and find new ones.

Frequent scenario planning

Every­day tasks such as bud­get­ing and fore­cast­ing con­tin­ue, but their use in uncer­tain times is lim­it­ed with­out fre­quent and data-led sce­nario plan­ning, adds Orte­ga. 

Emarsys serves the retail and trav­el sec­tors, and the pan­dem­ic has affect­ed each cus­tomer dif­fer­ent­ly. Sce­nario plan­ning must be applied along­side detailed client seg­men­ta­tion on fac­tors such as indus­try, size and recur­ring rev­enue or even one client at a time, he says.

“We’ve had to get spe­cif­ic in address­ing each customer’s needs in Amer­i­ca and glob­al­ly,” says Orte­ga. “We pro­vid­ed cus­tomers free solu­tions to help them retain rev­enue in the pan­dem­ic, for exam­ple assist­ing retail­ers with phys­i­cal stores move towards ecom­merce as quick­ly as pos­si­ble in case anoth­er lock­down hap­pens. They appre­ci­at­ed that and it has helped our cus­tomer reten­tion.

“Seg­men­ta­tion also allows a sharp­er focus on per­for­mance indi­ca­tors for each tier. But there is still no one-size-fits-all approach. We still have to piv­ot to new events quick­ly and flex­i­bly.” 

How­ev­er, as economies improve, the firm’s plan­ning rhythms have shift­ed from dai­ly and week­ly to quar­ter­ly. 

“Due to the uncer­tain­ty, we still can’t have con­fi­dence in a nine or twelve-month plan,” he says. “That makes it dif­fi­cult to explore new prod­ucts, ser­vices or mar­kets, which usu­al­ly need twelve to twen­ty-four months to plan and mea­sure suc­cess.

“We are just try­ing to be as effi­cient as pos­si­ble in core mar­kets and refine our prod­uct for each seg­ment. But my biggest take­away from the pan­dem­ic is to be more empa­thet­ic and under­stand the human impact behind each deci­sion. Reduce resources where nec­es­sary, but always be lis­ten­ing and tak­ing a more qual­i­ta­tive approach. It’s a fun­da­men­tal shift from the tra­di­tion­al CFO approach.”

Once lock­down is lift­ed and social-dis­tanc­ing restric­tions ease, will busi­ness quick­ly get back to nor­mal? Or will we see a pro­found and cus­tomer pref­er­ences? Here are six changes in con­sumer behav­iour as a result of the coro­n­avirus pan­dem­ic that mar­ket­ing pro­fes­sion­als should be aware of.

With­out ques­tion, lock­down has impact­ed the cus­tomer mind­set. Whether clap­ping for the NHS and sup­port­ing it in oth­er ways, set­ting ambi­tious fit­ness goals or tak­ing up home bak­ing, chang­ing cir­cum­stances have inspired mil­lions to take vary­ing forms of pos­i­tive action.