As an business owner, it’s critical that you are prudent and effective as you set about dealing with the Covid-19 pandemic of 2020 and its realities. We have an ever growing economic impact and despite governments around the world taking strong economic action, we will all be affected to a greater or lesser extent.
The Australian Government has announced details of its financial package aimed at helping small businesses. These measures will help but they don’t address the issues of individual businesses.You will need to do a whole lot more yourself.
Nothing that you planned is valid anymore
Whatever your 2020 plans were; however you thought 2020 would play out and what you would be able to achieve, things are going to be very, very different now. There is no avoiding that. All the plans you had are going to need to shift and you will need to make whatever changes you need to make to strengthen your position in the light of these developments.
There are few relevant precedents for a pandemic like this, none within the Australian context. We have had various outbreaks before, even in the more recent past, but nothing on this scale, with this level of contagiousness, with such mortality rates and with such global financial implications.
Even though we are looking at a human health driven phenomenon, the restrictions and measures that are being put into place will drive tremendous economic changes that simply cannot be averted.
The eleven steps outlined below comprises a framework for you to work through. It does not pretend to be a solution. Indeed there may be elements of your business that are not addressed here. But it will get you started and thinking about what you should be doing to minimise your business risk.
Step 1: Communicate
All relevant authorities have been doing a lot of communicating and so should you. When there is a crisis, people start to worry. When people worry, they become negative. When people are negative, they hunker-down and tend to be more cautious in their reactions and responses. With all the restrictions on gatherings, with social distancing becoming the way people now have to interact, communication must be a key focus for you.
So you need to keep in constant communication with everyone relevant to your business. Your team and stakeholders, your customers, your networks and your community. They all have questions, they all feel insecure, they all are hungry for information. So you need to be updating them daily on:
- what you are doing
- what’s changing
- What you next moves are going to be etc. etc.
Keep your clients up to date on how you are responding, what you are doing and what measures you are putting in place to help and serve them.
In a crisis, you cannot over communicate. So keep in touch on a regular basis.
Step 2: Be Positive
Back in 2008, during the Global Financial Crisis (GFC), I saw businesses who felt that world was ending for them, and guess what – in many cases it did. But most came through by upping their game, seeking out opportunities, looking at what they could do that they had not done before and that changed their outcomes dramatically.
So make sure you do that. Sit down with your team and think about what you sell that’s like toilet paper.
Turn off the news
The media saturation that we are subjected to can be counter productive. In their anxious state, people are consuming a lot more news than they normally would and frankly, it’s depressing and scary. Too much negative input could stifle your business creativity at a time where that’s exactly what you need. You need to be positive and lead your people and your clients through this. If you keep positive and actively look for ways to support your team and your clients, you will succeed.
Negativity is going to be around you all the time under the circumstances. Expect people to gravitate around positive people, so be that positive person for your family, your staff, your customers and your community.
Step 3: Understand the cycles and the environment
The world economy operates in a cyclic fashion; with a period of 7-10 years usually. Each cycle comprises phases very similar to the four seasons. Understanding these will give you further insight into what is likely to happen that should inform your decisions and actions.
The main question is: will this event trigger a complete economic cycle or is it going to be a shorter term glitch? The GFC triggered a complete cycle that we were just emerging from.
Step 4: Change
Most people understandably avoid change. But to effectively deal with the current situation one has to understand that change is inevitable and this change needs to be affected quickly; you simply can’t wait. There’s a lot to deal with and one can’t let things overwhelm you or paralyse you into inaction. Taking action and getting ahead of things is the best tactic. Waiting to see what happens in the hope that it will blow over, which is the same as doing nothing, is a recipe for problems. A changed world requires a changed approach.
Without taking action you may not be buying yourself enough time. If you make the shift to a leaner, faster, better business and say things do blow over, then you still have a leaner faster better business!
You need to consider every aspect of your business: products, services, pricing, delivery, staffing and of course communication. Each one of these needs to be dissected, examined and adapted. Perhaps your entire business needs to shift or pivot, not just parts of it.
One thing to note: The old saying “if it aint broke don’t fix it” does not apply in this situation. This may be a case of fixing it so that it won’t break! Be ready and prepared for that if it’s necessary.
Step 5: Cut Back
In agriculture, when autumn comes, there are specific things that need to be done. Old growth needs to be cut back. It just has to happen or the next season’s crop will be adversely affected.
Despite the economic measures that the government is putting into place, they are not going to make cash payouts if your business is short of cash. So you need to take measures to preserve your cash. This will mean curtailing your spending on certain things. That doesn’t mean you stop spending on marketing and sales and other things that will help you bring on business. Look at things that are unnecessary right now and put them off. If you were going to upgrade something, say, but can put it off, put it off for the time being.
Do a thorough analysis of your expenses, cut back where can, renegotiate what you can. Think of this from a cash flow point of view. You need to do things to maximise how much cash you retain. But be careful not to throw the baby out with the bathwater, because at some stage this will be over and you don’t want to have any regrets. To use a simple analogy, If your doctor has put you on a course of medicine say, don’t cut back on that to save cash because that will affect your ability to do your job and generate cash!
Step 6: Extend Credit
This is very important. Extend your credit now. Get more credit cards, get any kind of credit you can. At the time of writing, the banks are still in the credit business; they’ve not cut back. If you don’t act quickly, you may miss the boat. Remember this: The banks will not give you credit when things are tough – only when things are easy. It’s far, far better to have your lines of credit open and never use them, then to be refused when you need them. So act now on this.
You may have a very conservative approach to lending and credit in the normal course of events and have been able to manage fine and that’s understandable. But we are not talking about credit for the sake of expansion or any other type endeavor with an abnormal level of risk. That’s a different scenario entirely. Here we are talking about lubricating your business so that it can operate smoothly from a cash point of view should it be needed. If you don’t need it you don’t use it. But if you need it and you don’t have it, that could be bad.
If you need to refinance or renegotiate anything, get onto it right now. Do not wait. This one is all about rapid action because the banks are likely to change the rules as things tighten up.
Step 7: Staffing Cuts and Changes
This is one of the most difficult things to deal with. If your business serves certain categories of business: travel, restaurants, pubs, anything where people need to congregate, amusements etc.,etc. You will quickly and severely be affected by this. Already we have seen a precipitous drop in airline bookings, restaurant attendance etc. Sporting events are all being cancelled or are closed off to live audiences. This will continue and the organisations and employees that are part of those ecosystems will take a massive hit.
Layoffs are a terrible morale killer, so if you can get away with not having to do any, don’t. There are other options to explore to get around this such as reduced hours, and possibly pay cuts. Wherever possible use leave; paid and unpaid. Try and keep staff because the cost of hiring afresh as we emerge from this needs to be borne in mind.
If you are faced with doing layoffs, do as many as you need to all at one time. They are tough to do and you don’t want to subject yourself or any of your staff members to a long period of emotional stress.
Suspend bonus programs. It’s just part and parcel of what we all have to do to get through this.
If you know cuts are inevitable, don’t wait until you are sinking. That won’t help at all. Act preemptively and in the right measure to ensure you can make it through. It’s like pulling off a bandaid. Doing it slowly is much more painful than a short sharp action.
Step 8: Plan Work From Home
It’s most likely that you will want to have as many of your team as possible work from home.
Investigate how you are going to be able to have people work from home and be productive.
Go through all your processes and map out solutions paying particular attention to the informal communication that takes place in an office environment and things that are done in person. There are many, many businesses that are working like this already so you will not be breaking any new ground. But there are many options and variations you will need to research.
With staff members working from home, don’t forget to communicate with them very regularly. They will immediately miss the camaraderie of the office environment and may feel isolated. The teamwork element will need special attention.
Don’t think of this in terms of a short term measure. You may have to operate like this for an extended period of time. So make sure you do things thoroughly and be sure to do some shakedown tests to verify that your processes and solutions are as robust and productive as possible.
Step 9: Service Delivery
For anything other than online delivery this is very important. Sending staff members to spend time at client sites may present challenges if we look at some of the lockdown measures being taken in other countries likely to be introduced in Australia.
If you are dependent on 3rd party deliveries such as courier services, there are two possible scenarios:
- They stop or curtail their services so as to protect their staff
- Their services become oversubscribed because everyone else has started using them.
Either way, this needs special consideration.
Step 10: Marketing, Selling and Business Development
Maintaining steady revenues should be at the front of your mind. Accordingly, you cannot stop things like marketing and selling, in fact there are good arguments for increasing your business development activity. Don’t assume that the marketing you were doing before the current crisis should continue unchanged. The environment has changed and chances are your marketing needs to change in sympathy with that.
It’s advisable for you to keep a close check that your marketing and sales work continues to be effective. Don’t assume that what you were offering last month is still valid. You may need to reformulate your offers.
It’s advisable to firm up your credit policy and go for cash up front wherever possible in these circumstances.
Step 11: Repeat Business and Client Retention
In these times, there is no more important priority than keeping your clients and have them continue buying from you. You need to be in regular communication with your clients and customers all the while to keep them happy and to show that you care. Make sure they feel like they are getting great value.
You should pay special attention to devise innovative strategies in this area.
What you should be doing about all of this
There is a lot to do. The survivors in times of economic hardship are those that take action on a timely basis. That means making good decisions based on thorough analysis and understanding.
If you are carrying on in a ‘business as usual’ fashion, you are just adding to your risks.
If you are unsure of how to deal with this, feel free to reach out