Chile -and the world- is going through uncertain times. After the social outbreak of October 2019, the pandemic of Covid-19 present for several years and the election process we are going through (constituents, mayors, governors, presidential primaries), we are in a stage of changes and uncertainty, which tends to postpone investment and slow down the growth of companies and the economy.
Companies today are navigating in a sea of uncertainty, and the participation and involvement of the board of directors is key at this stage to safeguard and monitor the value of a company.
The main actions to be taken by a board of directors in turbulent times, in addition to its usual functions, are as follows:
- Check the company's strategic plan and reformulate its objectives and metrics, if necessary. (If you do not have one, we suggest you prepare one.)
- Diversify risk and reduce the concentration of the business in a single buyer, supplier or other critical actor. Evaluate the geographic diversification of sales, generate plans to enter new markets and ensure good management of foreign exchange protection, among others.
- Go to to financing needs in a scenario of fluctuating and rising interest rates. If the company has experienced a decline in sales accompanied by a cash crunch, this becomes critical.
- Manage liquidity, from credit and collection policies to investment plans. Project and monitor cash flow regularly, hopefully on a weekly or monthly basis, relentlessly.
- Measure the impact of potential tax increases and taxes and seek ways to minimize their impact on short, medium and long term results.
- Monitor The validity of the strategies and tactics used, and plan how to continue building value even in scenarios of uncertainty.
The regular role of the board of directors should not be neglected either, which consists of actively monitoring the company's monthly results, its progress, its strategy, and making sure that business planning is not neglected and that the company does not lose sight of the core business.
