Author: Mark Cotgrove | Reading Time: 9-10 minutes
Is it possible or should we just accept the inevitable and fold our tents permanently? Many small businesses have done just that faced with overwhelming pressures of collapsing revenues, employees jumping ship and entire markets just disappearing before their eyes. Some had no choice but others made that choice. However, you can also choose to fight for what you built through hard work and ingenuity. Read on to find out how to survive a business crisis.
Every business is facing a range of issues arriving out of the Covid-19 pandemic but they can be particularly acute for smaller, less well-established companies. SMBs do not necessarily have the depths of resources or the financial firepower to simply weather the storm and continue as before.
The ongoing Covid-19 pandemic has had a massively disruptive, even destructive impact around the world with many economies enduring an absolute battering. We are now in the midst of the most extreme form of corporate Darwinism we have ever experienced. To survive, you have to adapt. Not in decades or years or even months but in just days.
Today, we’re sharing the five key areas that you can change now to survive the current business crisis (and any future ones).
The key areas SMBs must focus on
This is primarily intended for smaller companies that don’t have access to the resources to engage an external expert, such as a business consultant or advisor that larger companies do as a matter of course when in the doodoo. Having said that the 5 key areas are just as relevant to business of any size. We’ve distilled the five key areas of your business that you need to focus on and the urgent changes you need to make to first survive and then emerge stronger and fitter as a result.
What will I learn here?
The ideas, suggestions, and advice we offer here are from a mix wide personal and professional experience of business, as well as guidance from subject matter experts in each dimension we are going to cover. What you will takeaway is a framework to better understand and take stock of your business. This framework gives you the structure to do what you need to do in a repeatable way. Too many businesses either never take stock or do it in a haphazard way.
You will also find the dogged determination to get through whatever is thrown at you and use that experience to become stronger and more resilient.
What do I need to do and how?
We suggest that you do this in a structured and focused way so that you can gather appropriate data which will form the basis of any improvements or changes. This should happen in three stages across each of the five disciplines we alluded to above. These are Finance, Customers, Innovation, Communication and People (in this order).
The three stages are:
1) Take stock of where you are today. Assess yourself against the levels of maturity in the matrix using a traffic light metaphor. Green indicates that all is OK and no further action is required immediately. Amber is OKish but could be improved. Red means you have a “clear and present danger” that must be addressed right now. Position yourself on the sliding scale in the place that best represents your current state. Make this a green dot.
2) Assess where you really need to be to get to “survival” status and mark that on the same sliding scale. Make this a blue dot.
3) The difference between these two points is now your action plan, and you prioritise accordingly. The biggest gap and the scores that are most in the red should grab your attention.
You will then be able to identify what are short term actions and which are aimed at medium term outcomes. The key point to bear in mind is that you ideally want one to segue into the other, rather than have say a short-term plan which then has to be torn up to make way for a different medium term one. They should be in effect two phases of the same plan.
So what are these five key areas?
1. Finance: This is the lifeblood of any business so this is where we will start as your survival depends on getting this bit right. Within the Finance heading there are four main elements for you to be right on top of.
- Cash on hand/burn rate – how long can you survive with reduced income?
- Accounts payable / Accounts receivable – how quickly are you paying suppliers and how quickly are you being paid by customers?
- Assets – do you have a lot of cash tied up in WIP or stock?
- Liabilities – what are your short, medium, and long-term debts?
2. Existing Customers
- Identify which 20% provide 80% of your revenues now
- How are you going to retain those customers?
- Who follows up – what is your sales process for this?
- What can you start doing today to be creative in keeping revenues?
- Can you re-purpose anything you do or make and pivot to new markets?
- What new opportunities can you see – new products or markets or both?
4. Communication: Be as honest and transparent as you possibly can always
- What do you need to say?
- Who do you need to say it to and what medium will you use to say it?
- When do you need to say it?
- What response do you want?
- Who do you need to keep and who can you let go?
- What capacity and capability do you need for now and for new stuff?
- What training or re-purposing do you need to do now?
- How efficient is your resource utilisation – can you manage remote working for a longer term?
As you work through all of these component parts of your business some fundamental principles should be applied. You are going to be making some difficult choices, many of which you would probably rather not make. But unless you just want to roll over, or you are simply waiting and praying for the storm to abate, then you have a finite window of opportunity to take matters into your own hands before you are swept away in a tsunami of changes over which you have no control.
The course we have suggested is specifically designed for and scaled for the needs of smaller businesses who can’t call in armies of business consultants. And even if you could, by the time they might arrive and come up with a plan for you, it could all just be too late.
We will soon be launching an online project that guides you through this process and provides you with the instruction and resources to build your own route to a successful future. We’ve codenamed it “Project Ark” so keep an eye on our website and announcements through various media such as LinkedIn (please follow us to ensure you get notifications).
But until then let me leave you with some parting thoughts.
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 where the ability to adapt quickly is going to be a key determinant of success.
For more understanding on what past crises can teach us in order to survive the current one you can read this article “Crisis? What Past Crises Tell Us About The New Future”.