Responding to Covid-19

A Strategic Framework to Guide Business Action

Drawing on insights from over 25 years' experience in turnaround management and business performance improvement, this report sets out a strategic framework specifically developed to help businesses respond to the challenges of Covid-19.

In this report, you will discover:

- A three-stage framework for developing a response to Covid-19

- The key components of a Covid-19 business continuity plan

- Cashflow modelling in times of extreme uncertainty

- Cashflow mitigation strategies to secure the near-term viability of your business

- Possible medium-term strategic implications of Covid-19

- A process for driving rapid execution of initiatives in a turnaround situation

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The Covid-19 Three-Stage Strategic Framework

Our Covid-19 strategic response framework is based on our in-depth experience in turnaround and performance improvement support.

We recommend businesses adopt a three-stage response approach:

- Ensuring immediate business continuity

- Securing the near-term financial viability of the business

- Positioning the business for medium-term

Ensuring immediate business continuity is about taking the urgent measures necessary to ensure the safety of the workforce, secure the supply chain, and reassure customers and other key stakeholders. As part of the business continuity planning, larger businesses should form a cross-functional crisis management team to coordinate the response and cut through the typical decision-making layers.

Securing the near-term financial viability of the business requires a detailed assessment of the potential impact of COVID-19 on cash-flows, and the development of mitigating actions to shore up revenue and align the cost base with the reduced volume of activity. Given the uncertainties around the potential trajectory of the pandemic, we recommend a scenario modelling approach, whereby the resilience of the business to a range of possible outcomes can be assessed. Combined with an assessment of current and potential funding channels, this then provides the context for identifying specific cash flow mitigation initiatives that can reduce near-term funding requirements and secure a sustainable platform for the business going forward.

Despite the current challenges, a number of commentators have suggested that the economic downturn could be relatively short-lived. If COVID-19 follows the path of past epidemic-driven downturns, the recession is likely to be “V-shaped”, with a steep downturn followed by an equally rapid recovery. In these circumstances, businesses that secure a sustainable near-term platform and are well-capitalised will have the opportunity to position themselves for significant medium-term opportunities.

Approaches, Tools and Framework

Discover the key tools and frameworks we use when supporting clients to tailor their own response to Covid-19 challenges.

Securing Near-Term Financial Viability

  • Iterative cash flow modelling
  • Covid-19 specific scenarios and response elasticities
  • Funding assessment check-list
  • Cashflow mitigation strategy repository

Scenario Cashflow model structure

During times of extreme uncertainty, we recommend a scenario approach to cashflow modelling.

Once you have a model structure in place, you can run revenue response scenarios to assess potential cash flow impacts. We recommend running at least two different scenarios to reflect current uncertainties with respect to the duration of COVID-19.

Cashflow mitigation strategies

Cash flow mitigation strategies are designed to stem revenue losses, contain costs and manage working capital over the next 12-18 months.

Specific strategies to mitigate negative cash flow will vary according to the characteristics of each business, but our cashflow mitigation repository provides a range of areas for further investigation.

6 Week Covid-19 Response Strategy Program

We have developed a 6-week program for businesses to work through the recommendations set out in the Covid-19 Response Strategy Framework. Download the report to receive further details of this program.