Post Covid-19 : Possible Scenarios, Challenges....

Cash Is The King : The one aspect that had been differentiating Life or Death of Businesses going through the Covid-19 Pandemic is likely to be the Businesses' ability to generate enough cash when the Global Cash-Flows had all but frozen and the Global Financial Gate-ways faced , the least ever traffic, in their lifetime. In all countries, Businesses - Big, Medium and Small - that have Cash Reserves are in a position to look into the uncertain future with hope and optimism. The rest are all in different states of dis-array, staring at Indefinite period of Cash Crunch and even possible Insolvency.

Hence it emerges that the real Difference between Businesses that are likely to survive and hence grow and those that might not is their Cash Reserves / ability to generate positive cash-flows. Not the Innovative Business Idea, Not their unique Revenue Model, Not the Cutting Edge Technology, Not the Lean and Efficient Operational Processes, Not the Market Share, Not their Brilliant Marketing, Not the Great Team of People, nothing else. The divide between the Businesses are going to be so stark - the Haves and the Have Nots. Thus, the strength or lack of it, for the next year or 2, is likely to be Businesses' ability to generate Cash-flows, either from out of their Reserves or from their customers - assuming that they are in a position to generate positive cash-flows.

This is going to result in Businesses realising the importance of a 'War Chest' or better Cash Reserves. Once Businesses start operating at normal levels, assuming that the Price / Cost is going to be at same levels, increase in Reserves is likely to reduce the Dividend Pay-out and may be in the medium term, reduced appropriations towards R & D and such similar below the line heads. There are likely to be re-scheduling of Debt Repayments thus generating better positive cash-flows. There is also like to be huge reduction in Capex Spends. Even those committed are likely to be reviewed big time. Especially those Capex related to additional floor space in support functions, that are anyhow more and more likely to be the Work From Home lot. Capex is likely to be only on life-saving Technology Upgrades and the others are expected to be delayed / deleted.

More With Less : (MWL) Generating Higher Profits is likely to be one of the key KPAs. Imagine the pressure that is likely to be there : Need to make higher profit despite possible falling revenues. Every Business Leader is likely to face the heat - either on the Cost Side or on the Revenue Side , a few on both sides - depending upon their levels in the hierarchy. Else, they might end up sacrificing their own head on the chopping block. Every line item of the Expenses would be extremely tightly controlled and would face minimum 10%-15% cuts. Depending upon the Industry, this number could go up. On the Revenue Side, the expectation would be to get at least 20%-25% additional revenue at least at the same price level and in many cases at a higher price - with much lesser Marketing Spends. Thus Marketing Teams would face the toughest of tasks.

Their Customers / Clients have a mandate to spend less, but these Marketing Teams would have to sell for more – the challenges are expected to be unprecedented. We are likely to see better and innovative practices to achieve this.

Sell-Outs / Bail-outs : Acquisitions Businesses having cash-flow issues despite enjoying good market presence struggling to make ends meet is likely to be a common phenomenon. We are likely to see this across Industry Segments. There are, hence many businesses that wouldn’t mind selling themselves out to save insolvency and jobs, while retaining the market. We are, thus, likely to see unlikely suitors. Those businesses with cash reserves would use this opportunity to buy out other businesses that are badly in need of a lifeline. Hence the Portfolio of such cash-rich businesses is likely to be a much varied one than normal. This unique phenomenon is likely to propel unprecedented re-alignments in Business Strategy, Positioning, Growth and most importantly, in Innovation and Creative Solutions.

Survival Of the Fittest.  Cash : Today, tomorrow, any day, Every day.