Rapid assessment scorecard for COVID-19
A rough measure of business resiliency for startups and MSMEs
COVID-19 is impacting businesses like never before. Since the enhanced community quarantine (ECQ) was declared by the Philippine president, we have been monitoring the situation closely to provide timely insights to our startup and MSME clients in the region.
Faced with so much uncertainty, many founders and entrepreneurs are grappling to understand how COVID-19 will affect them in the medium- and long-term as short-term impacts are already felt today. In our discussions with more than 50 of our clients in various industries, here’s a few key observations:
- Over 75% are considering to cut salaries and wages through a combination of work-hour reduction and employment termination
- Less than 10% have sufficient organic cash runway to sustain the business over the next six months
- More than 50% are confident that their business model is flexible enough to adapt to the new normalcy
- Around 25% are seeing investor interests in the businesses despite the current crisis
It is clear during the past three weeks of discussion that business owners should be taking drastic measures at this stage to lengthen their runways and build a strong business recovery plan once business operations are once again, allowed.
Rapid assessment toolkit
The government announced on Monday (6 April 2020) an initial extension of the ECQ period to 30 April 2020 in response to the growing threat of COVID-19. Through our discussions with our clients, we have identified key areas where business owners are concerned with as the days unfold. Using these inputs, we developed a quick scorecard to help founders and entrepreneurs identify their overall readiness once the ECQ is lifted.
The rapid assessment toolkit (RAT) is designed as a rough measure of your company’s readiness across three areas: (1) financial resiliency; (2) operational resiliency; and (3) market dynamics. We looked across several literatures, current observations and simulations to see how these different aspects contribute towards the overall resiliency of a startup and MSME.
To use this rapid assessment toolkit, simply identify the rough score applicable to your business across each prompt question and add the score up to see how you fare.
- Financial resiliency — The financial resilience of a business is based on the quality of its liquidity giving due preference to the availability of cash and sources of financing in the immediate term.
- Operational resiliency — The operational resilience of a business is based on the continuity of inputs into the business upping the risk factor on labor intensive businesses.
- Market dynamics — The impact of market dynamics on the business plays a smaller role, though the luxury and necessity market segment will be least impacted by the crisis.
Reading the results
The results are nonetheless a general guide to help businesses assess the level of impact of COVID-19 and the extent of austere actions that need to be taken by business owners. As it stands, our initial guideline values for the rapid assessment toolkit is broken down as follows:
- Less than 50 — COVID-19 is highly likely to disrupt the business in the short-term unless decisive action is taken immediately to address the key weaknesses in the current financial and operational model of the business
- Between 50 to 80 — Despite short-term resiliency, business owners will need to be prepared to take austere actions to be able to ride-through the uncertainties in the coming days
- Above 80 — Business is in a relative sound position despite the crisis, but monitor the events as they unfold and take necessary actions for business recovery
About UpSmart
UpSmart is the premier financial consultancy firm in the startup, SME, and social enterprise industry. UpSmart specializes in strategic finance (e.g., structuring and restructuring of legal entities, valuing and modelling companies, serving as chief financial officer of companies) and operational finance (e.g., optimizing business processes and controls, accounting and bookkeeping support, financial reporting and analysis).
About Filbert
Filbert is the co-founder and managing director of UpSmart. He leads the consulting practice of UpSmart and specializes in handling corporate structuring and financial transformation projects. He was previously a consulting manager at Ernst & Young in the UK. He writes for Tech in Asia, Business Mirror and serves as a mentor at The Final Pitch on CNN.
