The COVID-19 crisis is driving fundamental changes in consumer values, supply chains, and routes to market, knocking companies off balance. Immediate action is needed to address short-term liquidity challenges, but also to solve for costs and profitability and generate funding to invest in new opportunities. While some shifts are temporary, other things will never be the same: The new normal will be “never normal”.
Many CEOs are faced with plummeting sales and revenue and increased costs. Interventions to adapt may require investments in key technologies, processes and people. For some, liquidity has become a matter of survival.
The question on every CEO’s mind is: How long will this last? While possible scenarios range from quick recovery to prolonged chaos, there are five key levers available to outmaneuver uncertainty:
- Manage liquidity
- Financing and credit
- Eliminate or reduce costs
- Government aid programs
- Portfolio management
Financial levers pulled Now and Next set the foundation for success in the Never Normal.
Although financial priorities will shift over the next months, companies that will emerge stronger are those that best balance short-term liquidity and cost pressures in the Now with the right investments in new growth opportunities in the Next, and their responsibilities towards stakeholders and society in general.
Generating cash and liquidity NOW
Great leaders will be defined by how they lead strategically and operationally in the moments of crisis. As CEOs and their teams wrestle with the financial implications of market and operational uncertainties, they should proactively focus on economic viability, cost efficiency and competitive moves. This balanced approach to bolstering total liquidity, improving profitability, and setting the course for ever greater levels of enterprise value will allow enterprises to not only survive—but ultimately thrive and emerge stronger.