NASSAU, BAHAMAS — Some companies are using the COVID-19 crisis as the ‘catalyst’ to restructure their operations by addressing inefficiencies and excess cost.
Describing COVID-19 as a ‘body shot” to businesses across the country, Doctor’s Hospital’s chief executive Dennis Deveaux suggested last week some companies are using the crisis to downsize.
Deveaux was speaking at the Rotary Club of Old Fort via Zoom.
He said: “If after the rebound they bring back less people than they may have had before, even if business activity returns, that likely points to the fact that the underlying reason for their actions was probably more opportunistic in nature even through there was an economic trigger.”
“Companies are restructuring under the guise of COVID-19. Often times companies will know they have structural inefficiencies and excess costs but there really is no catalyst to address it and that excess cost is kind of built into the way they do business.
Deveaux said: “A key way to assess whether businesses are acting in this response is to really look at what they do when things rebound.”
Another issue affecting business response at this time, according to Deveaux, is the prioritization of profit and loss statement management.
According to the former KPMG executive, some businesses are likely prioritizing short to medium term profits and as a result cutting non-essential spending which has a ripple effect through other parts of the economy and also affects other types of businesses.
Deveaux opined however that to be purely driven by shareholder or board expectations expectations is a mistake.
He noted there are other businesses that are now primarily concerned with the preservation of assets and mainly of cash.
“How much cash do I have in the bank and how strong is my balance sheet? If do not have cash, do I have the capacity to stay open?” he said.
According to Deveaux, many smaller business currently find themselves in this predicament.
“Right now they are just worried about how much cash they have in bank and their survival,” he said.
“COVID-19 is a body shot to firms in The Bahamas, full stop. Firms that are going to do well are going to use this time to re-position themselves and be better when they come out.
He added: “There are very logical reasons why employers have downsized but different categories of employers have different opportunities. Companies should be using this time to ensure that their firm emerges from this crisis stronger than they entered.”