During the pandemic, businesses have had to learn how to adapt to a rapidly changing economy. As more people work from home and live their lives online, businesses are embracing adaptability and agility, which often involves making important—sometimes unprecedented—financial decisions.
The current climate is a good reminder to all business leaders that they must be prepared to shift their focus to keep up with economic changes. That’s why we asked 15 members of Forbes Finance Council for some important financial lessons for businesses that hope to adapt and survive in the future. They share their answers with us below.
1. Invest in infrastructure that lets you tailor your user experience.
In today’s turbulent economy and the Covid-19 crisis, companies must provide a tailored user experience. People are scared and their fundamental needs have changed, so companies must adapt to those circumstances. This may mean investing in infrastructure to respond. By pivoting quickly, companies can reconfigure and reinvent in real time to tap into new revenue streams and thrive. – Alan Hayon, The Credit Desk
2. Focus on strategic financial planning.
Strategic financial planning that includes forecasting and financial modeling is the key to being prepared and able to adjust to different scenarios. Small businesses often focus on operational finance and omit strategic financial planning due to a lack of capacity and resources. When facing these extraordinary events, only those who have planned well can weather the storm. – Ngu Castro, Sustainable Northwest
3. Diversify your data sets.
The days of relying heavily on a single economic indicator and planning against one scenario are over. Businesses must diversify their data sets, mixing more soft data—such as Web searches, consumer sentiment surveys and other intent-based data—into their data strategy. Businesses must build models that incorporate multiple economic datasets and prepare for multiple eventualities. – Andrew Duguay, Prevedere
4. Assess your financial sustainability and supply chain strategy.
Businesses today are focusing on the challenges posed by Covid-19. First and foremost, they must ensure that employees are as safe as possible by securing financial sustainability and assessing their supply chain strategies. When lockdown restrictions begin to ease, the ability to absorb an impact and to operate better than the competition will be the key to surviving and adapting in the future. – Lijie Zhu, Dragon Gate Investment Partners
5. Create amazing digital experiences.
Business leaders need to stop thinking about “digital” as a distribution channel. Having a great digital experience for clients is the equivalent of saying that humans need air to breathe. Eventually, every business will need an amazing digital experience to survive. – Andres Garcia-Amaya, Zoe Financial
6. Create a culture of learning and trust.
Adapting quickly in this changing economy is a function of corporate culture. Creating a culture of learning and trust has paid big dividends for companies that pivoted early. Malleability only comes when you have a culture of trust. You can’t maintain liquidity if your employees don’t understand the “why” behind your requests. It all comes down to building a trusting organization. – Dr. Betty™ Uribe, Effectus Enterprises, LLC dba Dr. Betty Uribe
7. Have 12 months of cash on hand.
For years, individuals and businesses have heard of an “emergency fund,” but how about a global pandemic that required a complete shutdown of many businesses? That’s a disaster, and it should make your business rethink its cash levels. Having 12 months of cash on hand so you can operate without revenue is an absolute minimum requirement going forward, as are strong banking relationships. – Evan Kirkpatrick, Wendell Charles Financial
8. Revisit all aspects of your business.
It is not just about your profit and loss forecasting! A company needs to be proactive to survive in this unprecedented new environment. You should revisit multiple aspects of your business, not just financials. Include your new hiring goals, marketing plans, sales strategies and upcoming product features. This will help you develop a realistic financial plan that can be truly helpful. – Kristy Kim, TomoCredit
9. Monitor your finances weekly—even daily.
Know your monthly cash flow inside and out. Businesses everywhere are working with less revenue, and having an accurate picture of your financials is what will determine whether yours sinks or swims. Monitor your finances weekly, if not daily, to ensure your balance sheet is where it should be. Keep this habit up once the economy improves so that you’re set up for survival in future downturns. – Guido Shulz, Bento for Business
10. Develop new methods with different paths to monetization.
“Business as usual” is no longer the mantra. Flexibility is key to adaptability. Businesses need to imagine new methods with different pathways to monetization. With the global pandemic, those businesses that have reassessed and retooled have continued to operate. The last recession was a catapult for new methods and strategies, and we should expect a similar outcome from this crisis. – Maryanne Morrow, 9th Gear Technologies
11. Find the right back-office partners to support e-commerce.
Customers are out there, whether they walk into or click into your store. A direct-to-consumer e-commerce channel with a localized payment system that supports taxes, fraud and compliance is critical for businesses to thrive. Brands can partner with providers for back-office components or can create their own. If you go the DIY route, consider the costs of extra personnel and time to build that expertise. – Eric Christensen, Digital River
12. Tap into your network.
Collaborations are key. Having a close circle of leaders in different industries is extremely valuable. I have seen businesses able to survive because of the support they have received from prominent public figures they had relationships with. Networking is important, and there is no excuse not to do it during a shutdown, as there are plenty of online masterminds and virtual meetups you can attend. – Gabriela Berrospi, Latino Wall Street
13. Review your strengths, weaknesses, opportunities and threats.
In a dramatically changing climate, many businesses will need to revise or even dramatically change their strategy. Take the time to review your strategy with your leadership team (or just yourself if you do not have a leadership team). Have an opportunistic mindset. How can you continue to thrive? A basic SWOT analysis is a great starting point. Implement quickly and have a plan for the worst-case scenario. – Shane Hurley, RedFynn Technologies
14. Take advantage of low-interest funding options.
Typically, small-business owners have little or no access to capital. Most are funding their businesses through high-interest credit cards and high-interest money lenders. Smart business owners did not hesitate to apply for any and all funds that were available. Many did not, fearing they would go into too much debt. You can always give it back, but you can’t get it once the money runs out. – Thomas Gillespie, Access Receivables Management
15. Clean your ‘financial house.’
Business data matters more than ever—this is the “new normal” and it’s not going away. Getting working capital for their businesses beyond PPP and EIDL will be a struggle if business owners don’t have clean bookkeeping, a business checking account, solid personal credit and established business credit. If you as a business owner want to get approved, double down on how lenders see your business. – Levi King, Nav