Many businesses were hit hard during the COVID-19 pandemic and are still trying to recover from it. A lot of these companies were caught without some sort of contingency plan in place for this type of emergency situation. It is really important for businesses to take this seriously and begin contingency planning for the future to avoid problems experienced in the last year.
It is completely understandable that right now many businesses are trying to recuperate, stay afloat, as well as deal with a lot of other important business, and contingency planning might not feel like a priority. However, anything could happen at any moment and devastate a company and it is imperative that companies be prepared for this. On April 28, there was a Hot Topics for Corporate CPAs Virtual Conference where Jim Lindell, CPA, CSP, CGMA and president of Thorsten Consulting, examined the importance of strategic and contingency planning for businesses in regards to the future.
Lindell suggested beginning by considering how a temporary close or limit of operations would impact business, stakeholders, employees, and enterprise value. He believes that these conversations need to be had in order to know how they plan to react when and if it becomes necessary.
When contingency planning, it is valuable not only to look at possible future challenges, but opportunities as well. Some examples to consider could be: artificial intelligence, robotic process automation, and big data. When thinking about how you would do business differently in an unexpected environment, these would be good things to explore to give you an advantage.
According to Lindell, “There are different opportunities that can be dealt with in terms of the business models and new development tools.”
In his conference, Lindell spoke on “Forecasting and maintaining adequate cash flow and working capital.”
Lindell believes that if you are well-prepared and understand your cash versus working capital, you have a much higher probability of keeping your company alive when crises come up.
Lastly, he encouraged professionals to change to graphic visualizations in order to show their financial information. You can also supplement the graphics with additional information. Communication of important information is greatly impacted by this and makes a big difference.