When disruption catches you off guard, the results can be devastating.
We’ve witnessed it first-hand while working with clients over the past few months as they’ve struggled to overcome challenges they never imagined in their lifetime. The pandemic and subsequent lockdown have meant the premature demise of some businesses, but it’s not all sad news. For others here in Vancouver, it has revealed new opportunities to re-evaluate, recharge and reroute business operations, especially as the province embraces the new normal.
With the province continuing to embrace our new normal, it’s a good time to reflect on what we’ve learned and outline some of the key takeaways businesses can apply going forward to help them recover and build resilience.
It may come as no surprise that resource-based businesses in the west have been some of the best prepared to get through the challenges of the pandemic. No strangers to significant, regular disruptions that occur regularly in their sectors, they have become accustomed to maintaining a level of flexibility.
What does that look like? It’s quick and measured decision-making that opens the door to future opportunities, it’s the ability to make swift internal changes in response to external factors, and it’s the ability to do all of these things without halting operations, but instead adjusting where necessary to evolve and grow. In fact, according to HSBC’s annual Navigator research, Canadian businesses identified the ability to adapt quickly to external events as a top attribute that helped them stay resilient during the pandemic (56 per cent).
Being flexible is critical to business resiliency. Those that are able to can embrace change are more prepared than others because they conduct regular audits of policies and procedures that may need to be adjusted swiftly in times of crisis. Technology plays a big part in this, as businesses use tools that help analyze, predict and plan for new circumstances. With this information, businesses have a better understanding of where they can make operations efficient to cover cash shortages quickly. This is an extremely valuable skill when dealing with unexpected disruption.
Go for the pivot
Another factor that has contributed to success in the west has been the ability to recognize and steer toward new opportunities. This can result in the form of scaling up on current business or pivoting to something new to answer to health safety needs brought on by the pandemic.
Fluid Energy, for example, recently did this to meet the growing demand for medical supplies, knowing that Canada would have to start producing them domestically. We helped them secure the resources they needed to shift from producing chemical systems to producing hand sanitizer for consumers and front-line workers.
Other successful pivots we’ve seen in this region have included retail businesses shifting to rely more heavily on e-commerce. For those who had embraced the online side of their business already, this wasn’t a difficult departure. In those cases, being able to respond to the fast and high demand for online shopping helped them take advantage of increasing online revenue to balance out their brick-and-mortar losses.
In addition, we’ve also seen traditionally B2B businesses achieve success by adding a B2C component. For example, agriculture businesses pivoting to add a retail arm to their production operations, sometimes enjoying three to four times better results than production alone.
In regular circumstances, scalability is not something that should be actioned in such a hurry. It requires a strong business foundation first and foremost, with a diverse supply chain, reliable cash flow and growing activity. Businesses and the leaders behind them that are ready for scaling up also have a sense of what opportunities lie ahead and how they will seize them.
Cash flow is key
Whether you’re a business leader looking for ways to become more agile, scalable or sustainable in your operations, cash flow should always be top of mind. Consider these dos and don’ts for making it work for your business:
- Take a close look at your current state and assess how long you can operate under the current conditions;
- Reach out to your suppliers and partners to determine new payment terms if needed; and
- Review all fixed costs and consider switching to variable costs where you can. For variable costs, look for any efficiencies for streamlining.
- Rely on the same practices that have kept your business steady prior to the pandemic. Be flexible and open to new opportunities;
- Stay tied to assets that no longer hold value. Sell them if needed; and
- Spend impulsively. Measure business wants versus needs to help guide those decisions.
Being mindful of how you’ll stay afloat in an emergency situation is obviously critical, but you’ll also want to make sure that when it’s time to ramp up, pivot or enhance what you’re doing toward a more successful future, having access to funding, connections and international banking services will provide a strong foundation. This is where your bank can help.
We’ve certainly learned a lot along with the many different businesses we serve across the country and around the world. Helping our province and all of Canada get back on its feet is no easy task but sharing lessons and learnings will help us get there faster.
Pete Molenaar is the head of commercial banking, Western Canada, at HSBC.