What do you need to do next to ensure your financial sustainability? How do we start to think about recovery and moving on? Mazars’ global head of privately owned business, Gareth Jones, has some tips…
What are the key steps for a business to ensure financial sustainability?
Financial sustainability is vital. Businesses are struggling through Covid, whether that’s cashflow, access to finance, government support, or whether it’s just a lonely place to be at the moment.
What do business owners do? Where do they turn?
This is as much a question of sustainability as a purely financial concern – what else does that mean for business at this point in time? We’re starting to see many businesses refocus on sustainability, for a number of reasons. It’s in the press more; it’s highlighted more and as a consequence people have more of a social conscience.
When we talk about sustainability in the process of business, what does it mean?
Sustainability is long-term thinking. But, more broadly, sustainability asks us to think about if we’re doing the right things? Are we bringing sustainability into all of the decisions we make in the business? We need to talk about it in our board meetings and our operational meetings. Then it becomes part of the day job. And if you don’t report on it, it’s never going to get measured – so it’ll never improve, or change.
Once businesses get back to a position where they can invest – whether it’s in people, objects or other businesses – sustainability decisions have to be made around those investments, too. It can’t be just the business we have now – it’s got to be what we’re doing in the future. If you bring those things together, you start to shape sustainability at the heart of the business.
How do businesses focus on financial sustainability and integrate ethical values as part of their recovery?
It’s hugely important to bring them together in agendas. So, when you’re talking about finances, you’re talking about sustainability at the same time.
If you want to bring positive change into any business, whether it’s sustainability or ethical values, you’ve got to embed those across the business. When you’re looking at your business model; when you’re looking at strategy; when you’re looking at your teams; when you’re making decisions; when you’re developing processes – all those things have to be within the system.
Management teams and business owners have to lead by example.
This can’t be something that somebody else does – it’s got to be everyone. Tone from the top is hugely important. An element of this is new to some businesses. Yes, it’s been at the back of their minds – they think they’re making ethical decisions and showing ethical values. But are they?
Some of this is about training, and bringing all the businesses on the same journey. Without training, you won’t get mass distribution of those values throughout the organisation.
Your governance structure should reflect it. It’s all very well talking about financial sustainability or ‘why sustainability?’, or ethical values – but if people in the business don’t understand what that means, you’re not going to progress it. When you’re looking at your C-suite, or your management team, you need to change your recruitment process with this in mind.
Giving a company’s finance professionals and finance team members a part to play is important. It’s not just reporting on financial numbers – if you can bring them closer to the non financials, that’s really important.
If we talk about improving recycling, or improving energy saving, there’s lots of different investments that could support sustainability. Get those guys involved – it shouldn’t be somebody else just reporting on this. Align the financial metrics and the non-financial metrics that you’re trying to deliver in the business.
There’s going to be a big change in supply and demand as a result of Covid. What advice would you give to businesses?
Take a bit of time out of the business. I know that’s really difficult when you’re firefighting all the time. Take yourself out of business for a few days and really think, what do I need to do here? How do I adapt my business model?
This time last year you’d have to ring up a doctor’s practice to get an appointment, and might be seen in a few days time. There was no way that a doctor was going to talk to you on the phone about an ailment – or think about doing a Zoom call or a Teams meeting. That business has totally changed. That GP practice has totally changed. And then we changed forever. That won’t go back to the way it was.
Many businesses are going to be in that kind of situation going forward. If you’re not changing quickly enough now to reflect the future of business, you’re going to be in a really difficult situation, because others will do that.
There’s three things I recommend clients should be looking at.
Of course, there’s going to be a new balance between supply and demand. Some businesses are primed to take advantage of that opportunity and some are not. Ask yourself, if you had a big fundamental change to your business, how would you get through it?
If you can’t get through that, competitors will take market share off you and you’re going to lose more customers than you would, over and above the loss from Covid. It’s not just about cost. Don’t think: ‘incomes come down, I’ve got to cut costs.’ Spend time thinking about where else you can go. Where else are the sales?
We’ve developed a programme called Reshape, doing exactly what I’ve said. It’s standing alongside our clients and supporting them through this process. It is a lonely place and often people don’t want to give you honest answers or direction.
We’ve developed this programme to look at those fundamentals. To stand back from the melee outside the business and ask, what have we got here? Is this a good business? Do we need to change? What do we need to do to change?
Once we’ve agreed the plan, what sits on the back of that? This moves your business beyond your three month firefighting and three month action plan, to get through the next couple of months and to the next plan.
We use Reshape on a modular basis as well, because some clients are more advanced in their thinking and they’ve done some of this work in the background. Some of it might be supporting them on the financial aspect, helping them with their list of options, or acting as a sounding board – particularly where a business owner isn’t sure where to turn to.
Thinking about recovery and moving into the next phase is vitally important. Yes, you have to think about the economic environment and the Covid environment, but make sure you’ve got the key facets in place to make sure you’re successful.
We’re offering readers an opportunity to complete our free Reshape Assessment online tool here. It’ll help you identify the areas in your business most impacted by the crisis, which need a proactive response. Have a chat for 30 minutes or so with one of our consultants, and we can talk about how they can support you in your recovery phase.
Images: Scott Graham
The Good Business Festival is passionately non-exclusive. It’s not about what you do or who you know. It’s not about agreeing on everything all of the time. It’s about everyone working towards a better world – no matter where you’re starting from.