Surviving the pandemic - getting those critical decisions right in a world of uncertainty

For many businesses, the pandemic has thrown up all sorts of challenges (and that is an understatement!). Even those that have been lucky enough to see a surge in demand (sustained, such as supermarkets, and temporary, such as toilet roll manufacturers), determining how best to allocate resources to meet demand hasn’t been easy.

The vast majority of businesses have had to undertake wholesale change since March 2020, with long-established operating models having to be turned upside down, stretched, bent, and reformed in very short order.

It is pleasing that so many businesses seem to have pulled through so far, but the ongoing uncertainty makes decision making incredibly difficult, and material decisions that need to be taken (when they come up, such as a lease break-point) can ultimately impact on business survival or failure.

Now, more than ever, business financial and operational modelling is critical. Scenario testing is critical. With the UK and other governments worldwide seeming to ‘flip flop’ on crucial economic policy, on population movement restrictions, and on government support packages, business survival is about making the right decision at the right time, and considering the ‘what ifs’ to enable trouble to be navigated.

Uncertainty demands careful and considered financial modelling to answer those ‘what if’ questions. For instance, you might ask yourself “what happens to your business cash flows if the UK Government imposes a further lockdown?”. Only by undertaking robust financial modelling with an integrated P&L, Balance Sheet and Cashflow, can you really answer such questions. And when you have the answer, you need to consider possible mitigations and what positive impact they might have so you can prioritise those mitigations.

Throughout my career, I have always advocated data-driven decision making. Running scenarios via financial models, grounded in solid data, helps you to answer the fundamental questions. Getting the fundamentals right now is my strong advice, coupled with removing as much uncertainty as possible by investing in robust financial and business modelling.