Author: Dominic Rowsell | Reading Time: 8-9 minutes
Few people have lived through a global pandemic. But many have experienced various crises which have had a lasting impact on their lives. And it’s also true that a new breed of young business people has only heard about major events like this as historical facts and have no first-hand experience to call on. The changes facing every one today are without precedent in peace-time.
We hosted a webinar recently that discussed the three behaviours below. These behaviours categorise how different people dealt with previous crises.
- the “Hibernator”, putting his head, metaphorically, in the sand and hoping it will all blow over and everything will be as it was before
- the “Busy Fool” rushing around trying to be busy but who doesn’t really have a plan and so is probably doing more harm than good
- the “Productive Rainmaker” who knows, and crucially does, what is important without being distracted
It’s very easy, maybe tempting, to fall into the first two described above. But we would exhort you to avoid both and look at what benefits follow from being the Productive Rainmaker. The rest of the guidance in this blog is primarily for you. To access more detail about each of the points made below please download our eBook here.
You’re now in the business equivalent of an Ironman
This is not going to be a sprint. Not even a marathon, or ultra-marathon. It will be like an Ironman – every day. For those unfamiliar with an Ironman – it’s a gruelling 3.8km swim, 180km cycle and 42.2km marathon completed one after the other, typically in less than 16 hours.
Business leaders will not only need vast reserves of stamina, but they will also need to call upon skills and strengths they didn’t realise they had. And for those that don’t have them, they will need to find them pretty quickly.
Get your business fit and prepared for major effort and do so with a great sense of urgency.
Cash remains King – protect it at all times
Frequently businesses fail because they run out of cash than because they have a poor product. Cash is the fuel that feeds your business. You of course have reserves and you can use those reserves to keep you going. But eventually, you can’t go on so you have to conserve what you have long enough to keep you going until more cash arrives.
Do you have a good grasp on your entire cash situation? Look at your cash flow statements and projections. How much has revenue dropped? If it continues at the reduced level, how much longer can you keep operating at your present level? Look at your payment terms. Find other sources. Look at where else you can turn to for cash should you need it. Don’t put this off even one day. Do it NOW.
Get right on top of every aspect of your cash and protect it.
Black Swans and White Knights
Black swan events are characterised by their extreme rarity, their severe impact, and the widespread insistence they were obvious in hindsight. So where are the white knights in their shining armour? We alluded earlier to Government schemes that you might be able to call upon. These lunches are not free – you will have to pay the bill eventually. So, the best advice is not to rely on them at the expense of taking the necessary measures to preserve your cash and secure your future first.
If there was no assistance on offer, you’d have to do it anyway and if that assistance is withdrawn, then you may find yourself with more overheads than you had before. More than you might be able to carry in the future.
Be well informed about so-called handouts and use them as a last resort.
The first cut must be the deepest
There is no question that wielding the axe to costs and people’s livelihoods is uncomfortable, unpleasant, and emotionally draining. But it has to be done to preserve cash. You have to cut deep; deeper than is comfortable. Painful, difficult choices. Cut beyond what you are comfortable with and do it sooner rather than later. Staff costs are an obvious target for reduction. But you also have to question EVERY cost. Challenge every expenditure. Think the unthinkable. It is also vitally important that YOU lead by example.
Demonstrate Leadership and ruthlessly reduce costs.
Love your existing customers
It’s likely that 20% of your current customers are the ones delivering 80% of your profitable revenue so they are the ones you should be showering with love. Don’t wait, act unilaterally. Your current customers know you and know what you can do for them. Now is the time to go a few extra miles for them before they ask. Don’t follow the herd.
If you don’t look after your customers now, will you be leaving the door open to hungry, desperate competitors who might just be crazy enough to “make them an offer they can’t refuse”. Then when you next come calling, your past relationship will be forgotten.
Make your best customers even better and keep reviewing.
Be open, honest, and transparent in communications
Don’t try to bluff or invent some seemingly plausible, but disingenuous reason for your actions. As a leader, you are the one that others look to. If you are straight with them, the chances are they will go along with your plan and pull even harder. Be visible and accessible. Leaders are accountable. They own their decisions. They back their vision. They know why the choices they make are the right ones even though for some it is going to hurt more than others. Build and earn the right to be trusted by telling the truth.
Always be open, honest and clear in communications to your staff.
Identify and retain the talent you need for the future
We know we said cut deep and suggested that you may have to lose people, even some important projects to save cash. All true. You have to identify who these people are, and obviously, do that with the utmost discretion. The real point here is to protect your business by keeping those people but also making sure that if they do go, you don’t collapse with them. And that includes you.
Understand who your key workers are and retain them no matter what.
Evaluate and re-appraise your supply chain on both sides
As part of your cash preservation plan, you need to look beyond your own boundaries to see where your cash comes from and where it goes. That means looking not just at your immediate customers and direct suppliers, but their customers and suppliers as well. You may be able to engage some of the other participants in a collaborative “we’re all in this together” kind of approach, to see if there are efficiencies that can be made by the removal of unnecessary steps which saves money for everyone.
Always make sure you know where you sit in the end to end supply chain.
Don’t stop thinking about tomorrow – it’ll soon be here
As entrepreneurs we are always looking to the future and you would expect this to be a core competence. However, the future is changing in front of our very eyes, day by day, week by week. This means that if you want to actually have a future post-Covid, then you need to be thinking about it right now because it could arrive tomorrow. Some have already done so. Keep scanning all the horizons to see what is developing and what avenues you might be able to, or even have to, explore. And once you’ve looked at that, ask “then what”? Is that it, or is there more lurking just around the corner?
Focus on today but have a better plan for tomorrow .
Change lenses often to see things differently
Having the same view all the time can induce a trance-like sense of false security as all you see every day is the constant and familiar. That in turn leads to a lack of observation of events and others around you so it is good practice to change the way you see things. Scrutinise everything you do, everything you don’t, and try to think of everything you might need, however unlikely it might appear at first glance. The point is that it doesn’t matter so much what you do to keep ahead, as long as you do something.
Constantly review your business situation from different angles.
Conclusions and what to do next
There is no blueprint for surviving a global pandemic or how to deal with the inevitable economic consequences of lockdown around the world. It’s clear that the variation in approaches taken by different countries will play a significant part in the level of damage limitation available. We are in a phase of “Ultra-Darwinism” where the ability to adapt quickly is going to be a key determinant of success.
Cash is king, queen and emperor.
The most important thing, especially for a business that does not have the luxury of a FTSE-100 sized balance sheet, is to preserve cash. No-one is immune. Not from the virus nor from the need to conserve cash. So, if you take only one message away from this blog and our webinar, let it be “conserve cash”.