How Cash Flow Lending Builds More Resilient Businesses

In the long wake of COVID and a fresh load shedding crisis in South Africa, it’s hardly a surprise that business resilience is on the brain. Recent world events continue to expose the fragility of supply chains, customer bases, and critical infrastructure. The answer to this instability? Building resilient businesses. And, you may be surprised to learn, cash flow lending can help you achieve just that. 

More on that later. Before we get into how cash flow lending can help South Africans build more resilient businesses, we should explore the concept of business resilience in more detail. 

What is business resilience?

At its core, business resilience describes the speed and ease with which an organisation can adapt to sudden and incremental disruptions while maintaining continuous business operations and safeguarding people, assets, and overall brand equity. 

Business resilience is not just IT-related, and it doesn’t start and end with a disaster period. Business resilience includes planning and adopting post-disaster strategies to avoid costly downtime and patch vulnerabilities. 

COVID-19 put the resilience of thousands of businesses to the ultimate test, but a pandemic is far from the only major disruption which could threaten growing businesses. 

As this 2020 article from the Harvard Business Review points out, the same circumstances which led to the outbreak of COVID-19 (densely-populated cities, global travel) could lead to the spread of a cyber-virus or exacerbate the effects of climate change and social tensions, leading to economic instability. The world economy has faced unprecedented disruptions in the recent past, and South Africans have an extra load to bear (and shed). 

The reality is that the businesses that survive major disruptions are not the businesses with the most in-demand product, the best-produced strategy, or the most well-connected network. The businesses that survive (and thrive) are those that demonstrate a propensity for flexibility and adaptability – a.k.a, resilience.

Can business resilience be measured?  

Measuring business resilience is tricky, as the qualities that make a business more resilient do not lend themselves readily to quantification. And, in all fairness, the resilience of a business can only truly be tested in a disaster situation. However, it is possible to measure the financial resilience of a business, and this is an insightful part of assessing resilience overall. 

To assess the financial resilience of a business, one might consider the following factors: 

• The steadiness of cash flow in and out of the business 
• How much working capital the company has to play with 
• Debt-to-equity ratio 
• The business’s profit margin

Ultimately, the more capable a business is of raising cash from new debt, the more financially resilient it is. 

How do you build a more resilient business? 

Creating a failsafe business is a matter of finding and operating a crystal ball with a view of the future. However, it is possible to build a more resilient business by following these steps. 

1. Identify weaknesses in the business: This is not a pleasant or easy task, but it is necessary. First, make a list of the kinds of disruptions your business is vulnerable to. Do your offices operate in a natural disaster zone? Is your city especially vulnerable to the effects of load shedding? Review the business as a whole and determine which key areas should be prioritised in the event of a major disruption.
2. Develop a response plan: Create a step-by-step plan for responding to and recovering from disruptive events. Although it’s difficult to predict disruptions, the response plan should be as detailed as possible. 
3. Inform everyone of their role: Include stakeholders (from employees to investors) in the process of designing a response plan so that, in the event of a disruption, everyone knows their role.
4. Keep an ear on the ground: Continuously monitor your environment for changes in external factors such as emerging competitors, regulatory changes, and technology trends. Review and update your resilience plan accordingly. 

How can cash flow lending increase business resilience? 

Building business resilience might seem daunting, but it’s not difficult when you’ve got the right funding partner at your side. Cash flow lending does not just have the benefit of building more resilient businesses in the face of unexpected disruptions like a new competitor or a financial crisis; it can also be used to leverage new growth opportunities in the absence of disruption.

In other words, cash flow lending is not a last resort for rainy days. In fact, setting up a revolving facility now is a proactive way to prepare for positive growth opportunities in the future. Business resilience is not just about preparing for disruption; it’s also about preparing for opportunity. 

To that end, cash flow lending can be an effective tool for building business resilience by: 

• Providing businesses with access to capital 
• Improving the rate of cash flow in the business 
• Increasing financial flexibility 
• Protecting business continuity 
• Providing a robust safety net during transitional phases

Build business resilience with Bridgement

It’s never been easier to develop business resilience than with Bridgement’s cash flow lending solutions. It only takes two minutes to complete our paperless application online and, within 24 hours, your business could have access to up to R5 million in funding. 
Agility, flexibility, and a quick response time are part of what makes a business resilient. It’s also a part of what makes Bridgement the preferred funding partner for South African SMEs. Apply for your facility today.