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How to Survive and Thrive in a COVID-19 World


In this severe recession the primary objective of many businesses is survival. And survival is generally more challenging for small to medium enterprises (SMEs), given the lower levels of financial reserves and access to external financing.

Yet, it is critical to not only survive but be positioned to serve existing customers and take advantage of new opportunities in a post-COVID economy. The worrying concern is that some firms may need to severely slash structures and resources in a downturn to the extent they are ill-prepared to react to the rebound.

Survival and growth depend heavily on prudent management of both the Profit & Loss (P&L) Statement and the Balance Sheet.



Surviving COVID-Oct2020
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Revenue is the most critical aspect of survival. Movement limitations and reduced activity by customers have dampened the top line for many firms, especially those in high touch sectors such as travel, medical and restaurant industries, leaving some with few strategies to soften the blow. Businesses that are both nimble and creative are finding ways to adapt in an attempt to lure customers back while adhering to safety concerns. These strategies include:

  • Utilizing outdoor spaces, online or pickup service delivery, where possible.

  • Where in person contact is required, establishing and maintaining high levels of safety and limiting, for example, the number of people on flights.

  • In the case of medical facilities, pivoting to telemedicine, and limiting the number of in-person visits

  • Restructuring office layout by providing separate entrance and exit doors, doing temperature scans, having sanitizers readily available and mandating masks, with clear guidelines for social distancing.

Taken together, these steps are key to giving customers some degree of peace of mind which is a positive step towards business continuation.


Enhancing business terms is another strategy to boost or secure revenue. This is the time to offer discounts, throw in extra services and possibly relax the payment terms, especially to long-term and loyal customers, to induce those who are facing their own financial challenges. Be sure to state these as temporary accommodations.

Cost Reduction

Firms automatically trim costs in a downturn, as a necessary means of balancing out the effects of revenue decline. Discretionary items such as travel, entertainment and training may be suspended without long term consequence, while a reduction in force can be catastrophic to recovery.

Businesses should seriously consider how to implement staff cuts, to identify and deploy measures that reduce the loss of key employees and critical expertise while managing costs. Recessions, while painful, do not last forever and long-term success depends on having the right people in place to take advantage of economic improvement. A company, instead of doing a wholesale layoff, could opt to reduce compensation levels across the board, and pay the difference when conditions improve sufficiently. Lower bonuses and lower profit taking will make a difference too, and – crucially – engender higher levels of employee loyalty.

Balance Sheet Solvency

As we discussed, P&L management deals with profitability, and while profitability is usually positively correlated with solvency – the ability to pay the bills – balance sheet structure is the true test of solvency.

Accounts receivable (AR) is a critical test of solvency, both the movement in absolute AR as well as the Days Sales Outstanding (DSO) metric. In extreme terms, a business could be doing great work, stabilizing or increasing revenues, while its DSO worsens, as it is not collecting the cash at a good enough pace. The problems are obvious; an inability to pay operating expenses and any loan obligations.

DSO management may be improved in several ways.

  • Reserving flexibility and extensions for only the customers that are experiencing COVID related difficulties. Not all firms are crippled by COVID, and even those that are affected may have cash reserves that they are looking to preserve.

  • Actively pursue customers for collections – remember that all firms are looking to manage cash and “the squeaky wheels will get the oil.”

  • Consider offering or diversifying vendor card payment options. While this will take a bite out of collections (2-3%), it may be worth it in the interim where getting 97% of the cash 30-60 days earlier is the better solution.

  • Apply some of the same strategies with your own suppliers. Extend payment terms directly with them, where possible. Take loans where feasible, including PPP - this may be necessary to keep your employees, and address emergency needs. Also, review existing loan terms, both the financial terms and the covenants, to see what may be improved.


Once the initial crisis is addressed it is important to take stock of the finances for the immediate to medium term. Do sensitivity analysis with various revenue and cost scenarios. This will give a sense of the firm’s needs in different situations, and help to determine if you will need to make deeper cuts in expenses. Importantly, it will also shed light on the external financing needs. The firm may be in a position to pay down some loans, while hopefully keeping flexibility via a revolving loan structure. A severe business downturn will require painful adjustments and action to survive, but if the firm conducts meaningful and consistent P&L and Balance Sheet reviews, and implement the right strategic course of action, it will improve its chances of not only surviving but thriving.

About Mavenly Consultants

We are a national consulting firm providing accounting, finance and strategy services, primarily to small and medium sized businesses to help drive growth, now and into the future. We stand ready to help you run your business even when it is not business as usual. Do call us – (401) 405-4094 - today so we can help! Email us your thoughts or questions at info@mavenlyconsultants.com