How to develop a long-term financial planning focus amidst the Covid crisis

Finance, financial adviceHaving carved a reputation as a financial management specialist within private-equity backed firms, Vicky Wordsworth is no stranger to making quick-fire decisions that impact on shorter-term objectives. But she’s also a huge advocate for focusing on the longer horizon.

Here, the CFO of 158-year-old Bailie Group – a progressive family-owned group of communications specialists – therefore advises how business owners and finance professionals can look beyond the turbulence of the pandemic, to plan for the future…

A Gartner report issued in the earlier wave of the pandemic warned companies against implementing short term and unsustainable cost cutting measures. This caution was understandable – knee-jerk financial decisions can have devastating longer-term consequences in terms of everything from supply chain security to the retention of valued talent.

However, let’s also be realistic. For many organisations – particularly those without the luxury of healthy cash reserves – much of 2020 was about ensuring survival.

So yes, business leaders may have been forced to take some rapid actions they would have rather not, but in most cases the decisions will not have been made recklessly. They will still have been considered, albeit at pace.

Fast forward to organisations preparing for life beyond lockdown 3.0, and nobody would dare suggest we’re out of the woods yet. Some reports indicate an optimistic outlook for the second half of the year, which is confidence we’re all clinging on to, I’m sure.

However, even in uncertain times, it is possible to undertake more visionary financial planning with an eye on a more distant horizon. In fact, if you haven’t yet made the shift towards longer-term strategic thinking, now is the time.

The pace with which this shift can take place will naturally vary from one organisation to the next, and it would be wrong to suggest it’s easy. But here are 10 things to consider, in setting more far-reaching financial plans:

  1. If you’re worried about cash reserves, and you’re not 100% certain you’ve evaluated all financial incentives, grants and support mechanisms currently available, double check. Speak to your peers, accountant, personal and professional finance specialists, and so on, to ensure you are fully aware of your options.
  2. Don’t be afraid to look inwardly. Most organisations have already done this, but ensure you’ve thoroughly assessed your current financial ‘health’. Have you evaluated all spend, do you have robust supplier relationships, are you achieving maximum value and are there any weak points in terms of budget control? Get your ‘house in order’ before you make new plans.
  3. However, don’t delay looking outwardly too. It’s easy – and understandable – to focus on the day to day, especially if it’s proving difficult to manage cash. But if this degree of scrutiny and pressure becomes your ongoing position, it will soon feel overwhelming. It may be difficult to find the answers right now, but try to keep one eye on the possible. And – linked to point one – seek ideas, support and camaraderie from your business community. There’s a real sense of spirit among British commerce at the moment – even between competitors – which is truly refreshing to see. If nothing else, it’s a welcome reminder that you’re not going it alone.
  4. Ensure you’re thinking laterally to capitalise on potentially new market opportunities. Many of us grew to loathe the word ‘pivot’ in 2020, but it is nonetheless evidence that even during a global crisis, businesses can innovate and unlock new revenue streams – sometimes by making only simple adjustments to their proposition.
  5. Devise a three-year plan – a visionary goal to aspire towards. Ensure this is true to your organisation’s core purpose, as authenticity counts for a lot in the current climate. Define clear milestones, roles and responsibilities – including a refreshed management structure if necessary – to aid progress. Include more tactical, agile objectives for the next 12 months too, and celebrate wins along the way, however small.
  6. Once cemented, communicate the plan with the wider team – particularly any investments that signify your confidence about the future. This will breed optimism among the workforce and demonstrate your intent. At Bailie Group, we’ve revealed a substantial innovation fund for our group companies, for example, to re-ignite the fires in their bellies and support them with their own longer-term thinking. We’re also investing heavily in wellbeing, personal and professional development, so that when we return to some degree of BAU, we have energised, fulfilled and supported employees. Being financially prudent isn’t always about cost control.
  7. Update your risk register. Very few businesses will have had ‘global health crisis’ on their radar 12-18 months ago, but some boards do plan for ‘black swan’ events. It’s impossible to prepare yourself for every possible scenario, of course, but a degree of readiness stands the organisation in good stead.
  8. If you haven’t already, set up a Covid committee – it’s not too late. Select a team of decision makers who can talk frequently to make informed strategic and operational decisions, at pace, in the face of turbulence. The economy is often rich with uncertainty, so this move will benefit businesses when the pandemic is hopefully just a distant memory.
  9. Don’t beat yourself up. Nobody has all the answers, and the social media wizards who profess to be nailing everything, probably aren’t. There’s no right or wrong approach to financial planning, as such, as it must be relevant to the business concerned. But surrounding yourself with the right people, and keeping an open and agile mind, will go a long way to getting your organisation through this.
  10. However savvy you become with the numbers, don’t forget about people. The World Economic Forum Global Risk Report 2021 states the 7th greatest current threat – in terms of impact – is livelihood crises. We can each play a small part in trying to protect the security of society – certainly the people we employ – so staying true to our values, throughout all of this, is crucial.

Vicky WordsworthAbout the author

Vicky Wordsworth is a highly qualified finance management specialist and fellow of the Association of Chartered Certified Accountants, who moved from the world of private equity to become the CFO of family-owned Bailie Group, in 2019. Headquartered in Leeds, this Group of agencies and consultancies invests in people and ideas that make a positive difference, and properties that inspire. With a history dating back to 1862, the Group has always been driven by innovation and has a collective mission to improve people’s lives by sharing knowledge.

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