Financial Advisory for Small Business Survival during Economic Shocks: An Integrated Decision Framework

Abstract

The COVID-19 pandemic exposed the acute fragility of small businesses, many of which entered 2020 holding cash reserves sufficient for only a few weeks of operation. Existing advisory practice tends to treat cash management, cost reduction and continuity planning as separate disciplines, delivered by different specialists on different timelines. This paper argues that during an economic shock these activities are interdependent decisions that must be sequenced and coordinated. Following a design science approach, the paper develops an Integrated Decision Framework (IDF) for financial advisors serving small and medium-sized enterprises (SMEs). The framework links four modules: rapid diagnostic triage, rolling 13-week scenario-based cash forecasting, a hierarchical cost restructuring protocol, and financially grounded business continuity planning. These modules are connected by an explicit set of decision triggers based on cash runway, so that the forecast determines the depth of restructuring and the continuity plan determines which costs and capabilities must be protected. An illustrative application to a small food service business shows how the framework converts an initial runway of under eight weeks into a position that is close to cash neutral in the base scenario and survivable for more than ten months in a severe scenario. The paper concludes with implications for advisors, lenders and policymakers, and outlines an agenda for empirical validation.