Resilience involves being prepared for possible crises, anticipating and planning for disruptions in operations should they occur. In particular, where there are interdependencies in the supply chains, plans may be made for shortening supply chains in terms of local and regional sources of purchase and sales destinations to help avoid possible discontinuities in international sources. Greater co-operation/partnership arrangements in production and distribution may be developed on a regional basis and where possible, taking advantage of economies of scale.
There should be proper management of: Cashflow (regarded as the lifeblood of a business), working capital, inventory, debt, credit (and the diversification of sales). Goals, objectives and strategies should be well aligned. Roles and Responsibilities should be well defined and operational programmes should be clear, measurable and costed. Utilization of resources must be balanced between immediate/short-term consumption and investment for future enhanced benefits. Savings or reserves should be adequate to meet possible future crises
Work by respected international organisations point to the importance of financial resilience in the successful operation of small and medium-sized enterprises (SMEs):
The International Small Business Journal: Researching Entrepreneurship (first published in August 2020) shows financial resilience both in terms of cash and internal management systems including working capital management in SMEs are critical to the success and survival of SMEs. That small businesses face unique problems with access to external capital and that cash reserves are a critical tool for meeting such needs as paying employees and suppliers particularly in crisis times. The research found only 39% of businesses surveyed were bolstering their cash balances leading up to COVID-19 therefore suggesting that 61% of businesses may run out of cash.
JP Morgan Chase Institute for Small Business report: Cash is King, Sept. 2016 which focused on cash, suggested that managing cash and liquidity is critical to the survival and growth of small businesses. Its analysis of 470million transactions by 570 small businesses showed half of small businesses had a cash buffer large enough to support 27 days of operation.
The Harvard Business Review: Lessons on Resilience For Small and Medium Businesses (SMBs) June 2021 says: The Covid-19 crisis exposed stark differences in the fortunes of different Small and Medium-sized businesses SMBs). Well capitalised start-ups have weathered the storm better than cash-poor community businesses. That leading firms in both size categories (i.e. large companies and SMBs) had the financial resilience, organisational capabilities and strategic focus to continue to invest and adapt throughout the crisis. Most notably, they accelerated digitization, including automation and shifts to online channels and remote or hybrid work; reorganized and reskilled for operational efficiency and became more agile, increasing the pace of both product and business model innovation.