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The ongoing COVID-19 crisis is affecting every part of our daily lives. What comes next, however, will be the damage it does to our businesses.

Those most at risk are the small and medium-sized enterprises (SMEs). Larger companies tend to have access to cash on-hand, better-established credit relationships, and dedicated teams of internal advisers. Since most SMEs are not blessed with such resources, they are more vulnerable to a crisis. These shops are the backbone of Canadian manufacturing, especially in areas of the country outside of major manufacturing hubs.

Bench Capital Advisory, a Toronto-based financial advisory firm, is offering to help a limited number of mid-size companies assess their preparedness for the ongoing economic slowdown and develop a financial strategies in response.

“Bench Capital benefits from an environment of strong, healthy mid-market businesses,” explained President Alma Johns, who has written for Canadian Metalworking as a guest contributor. “If we are able to provide sound advice to a handful of companies that need it right now, we’ll benefit down the road through referrals and future engagements.

“A lot of the companies most in need of outside help can’t afford to pay tens of thousands of dollars in consulting fees while their underlying business is contracting,” said Johns. “We want to make sure that mid-size business owners are equipped with the insights they need to protect their companies during these challenging times.”

Stress tests and financial models are two tools a financial adviser can use to help companies make better decisions.

The purpose of a stress test is to assesses a company’s financial ability to withstand negative shocks. These tests can help business owners identify scenarios that would lead to an adverse event – such as a breached loan covenant, cash shortfall, or defaulting on an obligation. This information can help business owners determine the necessity and urgency of taking protective action or seeking additional liquidity.

Financial modelling can help business owners with their short- and long-term decision-making. By using a model, a business owner can analyze the potential impact, effectiveness, and risks of their most crucial financial decisions. For example, if a stress test reveals that a company should consider improving its liquidity position, a model can help the business owner decide between alternatives such as securing a new line of credit or divesting a non-core asset.

In addition to offering short-term tactical advice, Johns and her team also assist entrepreneurs who have longer term, strategic concerns.

“A lot of business owners who were planning to sell and retire in a few years are wondering how the fallout from this crisis will affect their plans,” remarked Johns. “It’s important for these individuals to seek qualified guidance, since the actions they take today will have a lasting impact on their financial futures.”