Drawing on insights from over 25 years' experience in turnaround management and business performance improvement, this presentation 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

1. Responding to COVID-19
A strategic framework to guide business action

2. COVID-19: A Global Pandemic
1
Case fatality rate by age segment [2]
"Governments have been forced into unprecedented peace-time measures to restrict the
transmission of the virus through social distancing ..."
At the end of December 2019, several cases of
acute respiratory syndrome were detected in
Wuhan City
By January 2020, the cause had been identified as
COVID-19, a novel corona virus for which we have
no natural immunity or available pharmaceutical
treatment
Unless suppressed, the high fatality rates
among the elderly population and those with
underlying medical conditions would
overwhelm the capacity of national health
systems
Source: COVID-19: Briefing note, 16 March 2020 (McKinsey & Company)

3. A Strategic Framework for Responding to
COVID-19
2

4. Ensuring Immediate Business Continuity
3
Crisis
Response
Establish a cross-functional response team
Second key staff to execute the response plan
Establish working protocols for the response team
Employee
Arrangements
Implement safety provisions for the workforce
Establish remote working protocols where feasible
Revise applicable staff policies regarding work absences, sick leave and other benefits
Review (and establish where required) regular communications with the workforce outlining your response to COVID-19
Supply Chain
Stabilisation
Assess current supply lines for potential bottle-necks, particularly where reliant on international supplies
Increase inventories where necessary of critical supplies
Where possible, diversify the supply base and seek domestic options
Customer
Engagement
Review customer touchpoints and implement measures to ensure customer safety
Review current payment terms / terms of contract and adjust where appropriate (e.g. waiving of change fees
for airlines)
Communicate with customers to share relevant details of the response strategy
Working Capital
Assessment
Review short term working capital requirements
Review current cash at hand and existing debt facilities to assess near-term capacity to meet obligations
Evaluate potential additional funding sources where required to ensure immediate business continuity
Other
Stakeholder
Assessment
3
Review existing community engagement initiatives and impact on stakeholders of COVID-19 response strategy
Develop mitigating strategy where feasible

5. Securing Near-Term Viability
4
"Securing near-term viability is about mitigating the extent of the negative cash flows
through management actions, whilst securing sufficient funding capacity to sustain
operations during this time ..."

6. Cash flow scenario modelling
5
Cash flow scenario model structure Once you have a model structure in place, you
can run various 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 [1]:
Delayed recovery: sharp fall in consumer and
business spending until the end of Q2, leading
to recession and prolonged slump until the end
of Q3. Recovery in some regions by Q4
Prolonged contraction: the sharp fall in
consumer and business spending persists
throughout 2020, with increasing
redundancies and bankruptcies throughout the
year, leading to a self-reinforcing downward
spiral. The global economic impact approaches
that of the global financial crisis of 2008–09.
Recovery begins only in Q2 2021.

7. Funding Assessment
6
Sources of funding for private businesses
without access to the capital markets
Existing cash at hand
Existing debt facilities
New debt facilities
Factoring (e.g. invoices, credit card
receivables)
New equity investment (existing
shareholders
or new investors)
Government support
If a funding shortfall is potentially required, it is necessary to assess
the funding facilities available to the company. We are already
seeing listed companies tap the equity markets with deeply
discounted equity raisings to shore up their balance sheets.
By working through this funding sources list (and any other sources
of funding available to you), you can get a view of the available
funding that could be deployed to sustain the business through a
period of negative cash flows. Of course, where this involves
injecting new equity funding into the business, the decision will
depend on the potential risk and likely return that could be
expected in the longer term from such investment.
Comparing this funding assessment with the cashflow scenario
profiles generated previously will provide an indication of the
degree of risk to the near-term sustainability of the business. Most
businesses will need to undertake some form of cashflow
mitigation strategy, but the level of urgency and extent of these
mitigation strategies will depend on the assessment of this degree
of risk.
"Most businesses will need to undertake some form of cashflow mitigation strategy ..."

8. Cash Flow Mitigation Strategies
7
Revenue
Mitigation of revenue response elasticities by developing alternative
propositions, targeting new opportunities, and securing alternative
sources of revenue from existing assets and asset disposals
Operating
Costs
Margin improvements through improved supplier terms where
possible, combined with reductions (temporary where possible) in
capacity to align with forecast demand conditions. Capacity
reductions may include rationalisations of outlets / store footprint,
and reductions in operational staff costs
Central /
Overhead costs
Reductions in staff and non-staff central overhead costs, including
reductions (temporary where possible) in working hours, staff
headcount and rates, re-negotiations of lease obligations, and
detailed scrutiny of any third-party procurement
Working
Capital
Measures to ensure that any reduction in activity translates into a
working capital benefit, with a review of debtor and creditor terms,
and a key focus on bad debt risks
Funding and
Grants
Restructuring of debt commitments to reduce rates where possible,
combined with maximising the benefits of any Government measures to
support businesses
"Cash flow mitigation strategies are designed to stem revenue losses, contain costs and
manage working capital over the next 12-18 months ..."
An extract from a cashflow mitigation
strategy mind-map

9. Positioning for the medium term
8
"Although the timing of the recovery is unknown, the combination of loose monetary and
fiscal policy, together with a relaxation of social distancing policies when the time is right,
have the potential to trigger a strong recovery ..."
Those companies that secure their near-term viability
may be well-positioned to benefit from significant
growth opportunities within a 1-year timeframe.
The current dislocation creates specific opportunities for
well-capitalised businesses or private equity funds to
pursue new acquisition opportunities at substantially
reduced valuations.
Demand for international travel is likely to remain
subdued as businesses see the benefits of video-
conferencing and consumers preference domestic
travel options
Businesses will seek to diversify supply chains,
reducing reliance on any single country or source
Governments are likely by necessity to adopt much
more interventionist policies that may prove difficult
to roll-back
In the US, current inequality in access to the
healthcare system is likely to be a key issue for the
election.
There may however be some structural changes in
economies that persist for a substantial period of time:

10. Covid-19 6-week support program
"We have developed a 6-week Covid-19 Program to support businesses in applying our
framework to respond to the challenges posed by Covid-19 ..."
Access to the 6-Week Covid-19 Strategic
Response Framework
All associated analytical tools, templates and
models
A range of support options, from a guided DIY
option with regular coaching calls, through to
Strategic Delivery options where out
consultants will support you at each stage
9
Program Benefits
Learn more

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the complete version
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