Digital Adaptation For SME’s Coping With the COVID-19 Crisis
By Dr Paul Raspin, Co-Founder of Venturi
Nassim Taleb, a Professor of Risk Engineering, advises us not to overly invest in trying to predict the future. He maintains that major events of significant consequence are wholly unforecastable; they are statistical “outliers”. Taleb refers to these events as “black swan events”, a reference to an ancient saying that presumed black swans did not exist – a saying which became reinterpreted to teach a different lesson after black swans were discovered in the wilds of Australia.
“As improbable as discovering a black swan, we now find ourselves in a coronavirus-stricken world. Business will need to step up to the challenge of adapting to remote working through taking advantage of leading edge digital solutions, especially those that support the quick adaptations needed to survive and gain relative advantage in 2020.
Examples of so-called black swan events include the internet, the personal computer, World War 1, and now we are living through another such event, the coronavirus. Taleb encourages us to make peace with uncertainty, randomness and volatility and rather than trying to predict events, build capabilities to be resilient to negative changes as they arise and capitalise on them as far as possible.
So, what are the challenges facing business right now during the coronavirus pandemic? What capabilities should businesses strengthen to survive and prosper during this time?
“One thing that is clear is that remote working is going to be the norm for the foreseeable future.
For many executives, managers and staff, social distancing will continue throughout much of 2020. In the spirit of small mercies, we can be grateful that we are living in the digital age and are able to continue to connect with one another, albeit virtually.
One observation I’d like to share as a co-founder and investor in a business that supports SMEs to lift their performance and value, is that not all businesses have embraced the full array of progressive digital services and applications. This may be limiting their potential to rise to the current challenge, and I observe that this is especially the case for many SMEs. My co-founder and colleagues at Venturi have been working on researching and exploring this issue over the last year.
Our R&D effort into SME fundamentals of successful management highlighted three key informational needs:
- First, SMEs need up to date, near real-time, information on how they are performing. This information covers traditional financial reporting, such as P&L, Balance Sheet, and Cash Flow, but also performance reporting metrics using non-financial data.
- Second, SMEs want more support to look forward and project into the future their business performance and financial outlook. They want smart forecasting upon which to make better decisions about growth options, investment, expansion, cost control, seeking credit, or taking on debt. According to our research, 80% of SMEs do not create future looking forecasts for their businesses.
- Third, SMEs want to focus on the enterprise value of their businesses. For entrepreneurs, investors, and key employee stakeholders, understanding the value of the business, and seeing how different initiatives and options impact on this value, is required to make the best medium-term strategic decisions and ultimately help the equity owners maximise their returns.
If you are an SME, I expect you can well relate to the above needs. These needs become all the more acute in the midst of dealing with the coronavirus. Over the next weeks, many SMEs will need to know how they are performing – realistically this translates to getting information on the scale of the business decline and thus informing how best to manage the downside. In this current crisis, forecasting is also more important than ever.
“Among other reasons, forecasts are required by banks in order to assess and approve Government backed BILs (business interruption loans). Being able to quickly and accurately pull this together will mean the difference between many SMEs surviving through Q2/Q3 2020 or not.
While there is no silver bullet to address the current challenges, there have been some substantial developments in digital based platforms and applications that can greatly help. These digital solutions are focused on delivering needed intelligence on financial, performance, and future focused insights to drive profitable growth. Common to these next generation solutions is that the service is delivered through a cloud-based platform which integrates multiple data sources from financial systems, operational performance systems, and CRM systems. Digital solutions in this space are now sufficiently mature to evidence hard benefits, such as saved management time, reduced costs, and value enhancing insights in real-time, 24/7, delivered remotely through multiple devices. This utility to remotely access business financial and performance information has never been more needed than right now.
As evolutionary science informs us, it is the species that is most adaptable to change that survives. I can’t think of an event in my lifetime that so demands paying attention to this maxim as does the coronavirus pandemic. I encourage SMEs to quickly look beyond their existing practices and technologies to progressive cloud-based digital solutions of the type described above. It may make a positive difference to your business fortunes. I hope so.
Paul Raspin is a co-founder of Venturi, a member of the Australian Chamber of Commerce. He is an experienced strategist, academic, and entrepreneur. Paul’s educational background and affiliations include: BCom with the Australian National University; MEc (with honours) Macquarie University; and a PhD in Strategic Management, Cranfield School of Management, Cranfield University. He is also a qualified chartered accountant and member of the CA ANZ and ICAEW.
Venturi is a chartered accountancy providing unique cloud-based reporting services to help SMEs achieve profitable growth along with meeting businesses accounting and tax compliance needs.
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