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The COVID-19 pandemic has decimated businesses the world over, reducing reserves and blunting cashflow. Companies have had to let staff go and have scrambled to recalibrate their operations.

This has had a direct and indirect effect on every industry.

However, there are companies that have become more resilient and found ways to survive and hang on until more benign times return.

This was the subject of Supreme Ventures Services Business Hub webinar, ‘Business Survival During Uncertainty’, hosted by Chantal Simpson.

One of the guest speakers, Gary Peart, who is both executive chairman of Supreme Ventures and CEO of finance house, Mayberry, recounted how one of the first things the gaming company did was to go out and conduct research on how companies fared in pandemics of the past or through events that disrupted operating conditions.

“One of the things we discovered was that 20 per cent of companies come out of the pandemic significantly better than they entered it. Another 30 per cent did not survive it and the rest took up to five years to get to where they were before the pandemic. We looked at the companies that fell in the 20 per cent category to see how best we could replicate what they did.

“These companies recognised that their businesses were going to be disrupted. They accepted they would have to do business differently in order to survive. So, if that means reducing staff in the short term then rehiring them later, so be it, because if the business dies, everything dies with it.

“What we did at Supreme Ventures was to look at our expenditure structure. The reason for that was the pandemic impacted our revenues immediately and if we didn’t focus on our expenses in order to make tough decisions, we would be carrying losses for a considerable time. These spell liabilities eating up the capital that you do have. It all comes down to your burn rate,” said Peart.

Taking an overview of the current situation, Peart sees three scenarios namely:

1. There are companies that have done well out of the pandemic, particularly food companies.
2. Then there is the middle tier that haven’t been blown away but are holding their own.
3. The bottom tier who are in a critical condition and are grappling with a high burn rate.

So what is a burn rate?

This is where you have to reduce your expenses to a point where what your monthly loss is, becomes less than your cash generation. This entails looking at your savings or for bigger entities, cash reserves.

The way Peart sees it, your company must have enough cash to go through the pandemic, which means finding innovative ways to generate revenue.

“Nothing should be off the table. If you sold chicken patty only, now sell vegetable and beef patty,” he said.

Peart and his SVL team made a special effort with the psychological aspect of the pandemic, assuring staff and stakeholders that the difficult times will pass and that they are equipped to deal with it.

“You have to give hope, hope that tomorrow the sun will rise, tomorrow will be a better day because mentally you have to lead the company and convince employees and family members into a mode that this will pass. It may take more than a year, so you are going to have to strap up. Mentally, you have to accept that.

“Another key point is that you have to accept the implications of COVID. You have to balance going after revenue with being aware that if you contract the virus, it can kill you. What’s worse than losing the business, is losing your life. You have to take the necessary precautions, not just for yourself but for your employees. This means that as soon as issues arise you have to immediately assess and jump on them.

“So where are we now? We have gone through a full year of COVID and realised that the world has not come to an end. Unfortunately, many people’s reserves are very low or finished but life goes on. Kids are going back to school and the government is varying its curfew hours. So, where do you have to have your business? The moment the tap is released, and you have an opportunity to expand revenues, you have to move immediately. You have to be flexible,” said Peart.

In summing up, he reiterated three points:

1. Be mentally aware that this will pass.
2. Keep expenses as minimal as possible. Ensure the business survives.
3. Stay alive and do what you have to in order not to contract COVID-19.

Dennis Chung, past president of the Jamaica Institute of Chartered Accountants, author, columnist and CEO of Supreme Ventures Services Limited, has helped in guiding many companies and his insight as a guest speaker were prescient.

Chung is of the view that it is important how companies view this current crisis, drawing attention to the half full/half empty glass metaphor.

“If you are going to address a crisis or strategy, you have to assess the environment. It was very important for us to be agile. As soon as we knew COVID was coming, we gathered together to determine what are the risks out there and things that could go wrong for us,” he said.

“The question we needed an answer to was how do we mitigate against all of that? We did a SWAT analysis which led to a strategic planning session. We asked ourselves what are the market opportunities that are available? Do we have the right business model in place and how efficient are our operations? Do we have the right team? The most important resource in any company is the people who staff it.”

Subsequently, he and his team executed a flexible plan which took into consideration all possible variables such as would the country be placed under lockdown.

Execution, Chung said is where most companies fail. Sure a firm can come up with a good strategy but without efficient execution it leads to nowhere.

“When things are not going how you want them to go, you have to understand that if you have done your planning properly, then you will make it through,” said the Supreme Ventures Services boss.

“Many times, we saw that things were not going as we thought it should go but because we know that we had put a good plan in place, we were pretty sure once we had executed, it would work. Human resources capacity is important, and I can’t emphasize that enough.”

He turned his attention to the crucial issue of variable costs versus fixed costs and seeing to it that you have as much variable costs as possible. This means once a company has to make a pivot, it doesn’t have to burden itself with fixed costs.

This is where Supreme Ventures’ Business Hub comes in, letting companies know that they don’t need to have the fixed cost of a back office, IT department, HR unit – that can be farmed out to Supreme Ventures Business Hub, thus reducing fixed costs considerably. This allows a company to therefore focus on revenues.

90% OF STAFF CAN WORK FROM HOME

Chung continued: “We improved our efficiency by employing automation. When the pandemic came, we were already formulating a ‘Work From Home’ programme and we are now at a point where 90 per cent of our staff can work from home. That has helped tremendously, not just from the company’s point of view of being nimble, but for the staff, where they are comfortable, and we can see productivity increasing. You have to put in place measurements and practices that you can sustain.

“Also, we moved from a 20,000 square foot space for staff to an 11,000 square foot building which was able to house more staff because of the efficiencies that we had put in place.”

Chung said it is vital to protect the core of the business, what is referred to as the ‘golden goose’. The core has to deliver and if it cannot some choices will have to be made.

“It’s all about assessment, strategic planning, putting a plan in place, execution and having an efficient operation,” concluded Chung.

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