Preparing financial forecasts amid COVID uncertainty

Dice showing profit and loss, on a newspapers’ financial pages.

With the new financial year fast approaching will you, as a mining business leader during a pandemic, prepare three different forecasts? Or not bother at all?

With the new financial year fast approaching will you, as a business leader, prepare three different forecasts? Or will you not bother at all? 

Which route you take will largely depend on the industry sector you find yourself in and the risks and volatility you perceive are embedded in those sectors.   

While Mining People (MPi) is in the staffing sector, I consider us to be squarely in the mining industry, so I place a higher weighting on trying (and I emphasise trying) to work out where the commodity markets might go from here. I’m fortunate to have not just recruiters on our team but also people who are technically trained in mining-related disciplines, as well as others who have studied and have a strong interest in relevant resources financial markets. And I am a qualified mining engineer and former operations manager myself.  

But despite this, I concede to having little to no idea where the markets might go in the next few weeks and months. As governments potentially wind back their economy-wide coronavirus financial support, who knows what that will do to unemployment and, therefore, demand for all manner of commodities.  

We live in a connected world

Even if I were brave enough to make such forecasts, there is a bedrock issue that is a massive unknown to all of us. That is, of course, the environment of a global pandemic that has so starkly reminded us that we are all connected and we only managed to slow the spread of the virus in some places by cutting ourselves off from each other.  

As we slowly reconnect, justified by the need to kickstart economies before they are ruined for decades (and also to mitigate another pandemic of predicted mental health issues), who knows what that reconnection will mean? 

We don’t know what this might lead to; just as we had no idea of the consequences of closing down our economies to deal with the pandemic. Consider this: 

  • Iron Ore dropped by 50%, then rose again
  • A barrel of oil became worthless overnight
  • International air travel has effectively stopped 
  • Pretty much every hospitality venue in the world closed
  • Governments effectively shut down the wedding industry and forced us to choose whom we invite to very small funerals
  • Governments of the world are paying their citizens to do nothing
  • The sun reappeared in Beijing after being hidden by pollution for 20 years. 

I defy anyone to prove they had any idea that all of these things (and more) were going to happen all at once.  

So what happens next? None of us have any idea. And because of that, I don’t believe we need to do multiple, detailed budgets. It’s a lot of work and it’s not necessary. But we do need to at least scope out various scenarios. Many of you have already done this, but I know (from talking to a lot of business owners, mainly the owners of smaller businesses) many of you have not.  

It’s time to plan for various scenarios

So, where to from here? Firstly, it’s time to scope out four options. Ask yourself what measures you will put in place as soon as you can see these things coming:


  • X % drop in revenue
  • Y % drop in revenue
  • Z % drop in revenue
  • Armageddon (how you will close your business down, ideally proactively, to minimise damage to all stakeholders). 

It’s also time to consider those relaxed insolvency laws

As part of this, consider that the government in Australia and some others around the world have greatly relaxed the rules around insolvency.

In Australia, specifically:  

  • Many businesses will be allowed a six-month period, up from the current 21 days, before they have to respond to a formal demand letter 
  • The minimum size of debt for which you can issue a statutory demand has been increased from $2,000 to $20,000. 
  • The laws around directors’ personal liabilities for insolvent trading have been relaxed.

While these laws may help some businesses, there will be others that will exploit them to avoid paying their debts on time, putting more pressure on their suppliers further down the chain.  

Sadly, we are already seeing some of this.  

There’s still room for optimism

Last month I wrote that the optimists will inherit the earth. In this case, I meant strong businesses in both the mining and staffing sectors. They will do so by using their relative strength to pick up great businesses and great people. But they will still need to wait to act on many of these projects because there is a large period of uncertainty to be navigated.  

This is why I think all businesses need to do their detailed forecasting for next financial year, based on something nearer the midpoint of their potential outcomes. But, in addition, you’ll need to have scoped out all four of the scenarios above. Then if things move downward more quickly than the midpoint, you are in a position to enact the various options, free of the highly charged emotions that are inevitably rampant when volatility heightens.  

A final word about optimism: it’s not doom and gloom for all

If you are one of those businesses in a sweet spot at the moment (home food delivery, gold, entertainment streamlining, health, etc.) your four scenarios might be about increases and what opportunities might be available to you and how you will respond as they present. Spare a thought for those who are struggling and perhaps send something their way to help them out— but make big plans and be ready!  

Either way, my best wishes. 

Yours in Optimism,


Steve Heather signature
Steve Heather – BAppSc (Mining Engineering) WASM, FRCSA

Managing Director & Principal Executive Search - Mining People International (MPi)

Fellow/National Board Member – Recruitment, Consulting & Staffing Association Aust. & N.Z. (RCSA)

[email protected]