The effects of COVID-19 on the health of individuals and society is profound and unnerving due, in part, to the speed of its historic impact. Similarly, I believe the sheer velocity of COVID-19 as a change agent will be unmatched for the foreseeable future. COVID-19 has emerged as a profound business disruptor, requiring business leaders across the globe to take unprecedented steps to sustain the health of their businesses and, in many cases, the well-being of their employees.
New challenges have continued to evolve and emerge with the spread of the virus, and many governments are providing support via incentives and stimulus packages. In the midst of this turbulent environment, we see many practical solutions coming from a host of private enterprises around the world as they tackle these challenges.
Many are focusing on resilience measures. As global supply chains, the financial markets, and the workings of day-to-day businesses are disrupted, the leaders of these enterprises are taking steps to not only address the immediate challenges, but also ensure that future risks are anticipated and managed on behalf of their employees, customers, and the business owners themselves.
Discussions have shifted quickly from a primary focus on growth to one of business sustainability and escalating concerns related to cash flow management and forecasting; business continuity; optimization of working capital; supply chain disruption; and the risks associated with losing employees and customers. As governments introduce new tax incentives and other economic relief measures, navigating the opportunities to access these support mechanisms has become a complex task in its own right.
However, in the process of addressing these challenges, our conversations with many entrepreneurs, founders, business families and other private enterprise business leaders are beginning to change as they turn toward the exploration of new opportunities that might be seized in dislocated markets. Potential acquisitions, business restructuring, and product innovations are being considered.
In general, we see successful private enterprises focusing on five critical areas to strengthen their businesses during this period of accelerated change, while also preparing the path forward.
1. Rigorous risk assessment and enhanced risk management practices: This includes a close examination of the immediate and longer-term financial, operational, supply chain, legal, and governance models, as well as an assessment of competitive risks and the potential customer- and employee-retention concerns.
2. Financial assessment and meticulous financial management: Detailed analyses of current and future working capital and cash-flow requirements are being conducted along with consideration of how to optimize the availability of tax incentives; identification of alternative financing sources; ensuring access to all available government incentives and programs; and recognizing expense-reduction opportunities.
3. Customer attentiveness: Following a customer risk assessment, businesses are developing strategies to enhance customer retention and identify new customer segments. New product developments are being explored to attract new customers along with potential acquisitions for growing the customer base or adding new customer types.
4. Employee attentiveness: Given the potentially volatile work environment, strategies are being developed to enhance employee engagement and retention. These can include the consideration of flexible work policies, updated reward programs, employee retraining, and gaining accessing to government support programs.
5. Operating efficiency: Internal efficiencies are examined with the goal of identifying improved processes and procedures that could translate into improved customer and employee experiences. This includes the potential for streamlining or restructuring business operations; introducing innovative cost-control approaches; identifying flexible, supply-chain alternatives; allocating resources more efficiently; and enhancing data collection processes to inform strategic business decisions.
These focus areas reflect the pragmatic business approach, combined with agility and resilience, of entrepreneurs and other private enterprise leaders who are successfully making adjustments to their businesses to sustain their success. Perhaps we’re watching the next generation of great private enterprises emerging among companies that have the foresight and agility to uncover new opportunities.
At KPMG Private Enterprise understand the potential consequences of the current global health situation for businesses like yours. We encourage you to read our business overview and action checklist entitled Understanding the Implications of COVID-19 for private companies.
If you would like more information or advice for your business, please contact your KPMG Private Enterprise advisor or your local KPMG Private Enterprise office.
- Combatting COVID-19
- Strategic Resilience
- Five questions to ask in times of change
- Implications of COVID-19 for private companies
- Preparing and planning for an uncertain world
- Anticipating the new reality
- New Tax Measures – SMEs
- A Private Enterprise Business Disruptor Emerges
- COVID-19 Response Act 2020 - SMEs