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Revisiting and reshaping your business for a sustainable future now and into the future.
Executive Summary
- What are some of the major challenges facing businesses today and how can we unlock opportunities in those challenges?
- Unlocking a future-proof business lies in creating plans for the future whilst being able to exercise agility in an everchanging world.
We’ve been reading a lot about how COVID-19 has forced companies – and entire sectors - to reshape their business in response to fundamental changes we’re seeing in the economy and the broader society.
But for many companies, the pandemic was one bridge too far. Right now, they need more than just a strategic reset. Some were already in troubled waters even before the World Health Organisation declared a state of pandemic in March 2020, and they simply could not turn themselves around. Others were able to weather the storm of poor performance brought about by the crisis, but then found themselves having acute problems with liquidity, or lacking the working capital to monetise new opportunities to accelerate their return to ‘new normality’.
When it comes to distressed companies, no two sets of challenges are ever quite the same. Threats come in many different forms – geo-political uncertainty, supply chain disruption, client channel changes, liquidity issues, competitor innovation, operational challenges, capital constraints, changing stakeholder expectations, even reckless trading and business liability. Often, several of them arrive at the same time.
These threats often result in operational and financial underperformance and value erosion. Sometimes we see a loss of focus, loss of talent or liquidity shortfalls. Maybe there’s a lack of clarity around performance and trust in the numbers. But what we often find is that business leaders know what the problem is, but they’re simply overstretched, or lack the capacity and expertise to do something about it.
That’s where EY-Parthenon’s Reshaping Results approach is proving invaluable for a growing number of businesses across the world as they look to rapidly solve business challenges, sustainably improve results and reshape for a better future. The key here is to deliver fast impact and sustainable results, arising from the vast array of risks and challenges that companies face that can impact and threaten their future.
In the current economic climate, we’re having a lot of conversations about value. Normally, these conversations are taking place from a growth perspective. When a business is struggling, though, the focus shifts more to value preservation, and ensuring that more value does not get lost. The first prize in this scenario is often to provide stability around cash flow and keep business going on own merits to get back to unlocking future value through restructuring or recapitalisation.
In simple terms, the Reshaping Results approach involves a six-step plan to address the issues facing distressed companies:
Have a plan
In the current uncertain times, forecasting is even more difficult than ever before. We help management teams identify and prioritise the most critical issues, stabilise the business, establish a leadership and stakeholder consensus around the solution and deliver tangible results quickly.
Rapidly create or re-create value
Time is of the essence. Business leaders must implement immediate actions to improve performance through pragmatic and sustainable answers.
Stay in control
Often, credibility with stakeholders has been weakened. It’s vital to align with stakeholders such as banks to (re)build trust and lead the restructuring and transformation.
De-stress and de-leverage
This involves assisting in the operational turnaround, and providing balance sheet restructuring, releasing cash from the balance sheet or creating investment capacity to reposition the business for a sustainable future.
Restore distress to health
Most restructurings need a Plan B. We create the time, space and environment to develop and deliver the right solutions to navigate out of bankruptcy or insolvency.
Be(come) resilient
Once a company is getting back on its feet, the key to staying ahead of the market and its competitors is to build future resilience.
The bottom line is that when a business finds itself in stormy waters, it’s not the time to lament the past and the circumstances that got you there. It’s a time to re-immerse yourself in the business and understand where your business is objectively.
Summary
Now more than ever the unpredictable nature of doing business is becoming more and more challenging for business owner. How can businesses plan and pivot for a sustainable future?
