“Follow your local Guidelines for you & your employees to be safest during this Crisis, and prepare to bounce back rapidly when it is over“. Peter/CXO Wiz4.biz
Topics about Succeeding during a Crisis: Risk, Crisis Plan, Transparent, Cash Flow, Boot-Strap, Operate, Customer base, Co-opetition, Communication, Strategize, Contingency Plan, Read & Study, Co. Culture, Strive, Survive, Thrive.
Who’s a Risk? It is often said that Seniors & those with impaired Immune systems are most at risk due to Covid-19, but Small Business are just as vulnerable – with many who are not going to survive a global economic slowdown. According to The Small Business Association, the average cash Safety Net for small Business is estimated to last only 27 days. The Government has communicated clearly and regularly around their safety plans, and they are taking decisive action to flatten the curve, but in so doing, the impact on businesses across the country is monumental. This is not unlike what is happening in other countries. Although fear & panic is rampant, Entrepreneurs now need to rely on one of their strongest traits: Perseverance !!!
Crisis Times are the best moments to re-assess + re-invent your business model while taking appropriate actions such as focusing on a digital model vs. more feet in the factory. Spend time with your team and advisors to reflect on your current business model, decide on the core vs. non-core activities and agree on the key pillars for transforming and re-inventing your company.
As a Small Business owner, you often don’t have a larger shareholder to rely on during a time like this, so we must take action to make sure we’re still standing when the shutdown is inevitably lifted. Here is a List of the following key things that Startups & Small Business owners can do during this time:
#1. Identify the key Risk areas
It is important to identify &prioritize the key risk areas that your Business is facing during this Virus Crisis. This Gap Assessment exercise should be completed with several stakeholders – including your leadership team, shareholders, board, advisors & investors (if you have any). The Risk “prioritization” exercise will consider both the level of impact for each Risk Factor and the probability of the Risk taking place. The focus will be on the high impact & high probability Risk areas at first.
#2. Develop a clear & concise Crisis Plan
This plan will be created from the Risk Assessment and will include SMART objectives & actions. The plan will also map your key Stakeholders (by levels of impact & influence), understand their needs, then identify the best ways to address these needs. The stakeholders will include staff, suppliers, customers, public, govt, social & other media. The Crisis Plan needs to first focus on the short-term actions during the Survival mode, then the long-term actions during th Revival mode.
#3. Be Transparent & Available
The best way to stop the mud of FUD (Fear, Uncertainty & Doubt) rumors – that spread in your company – is to be as transparent & available as possible with the key stakeholders of staff, customers, & suppliers. This open & direct attitude should be consistent and on-going across all channels from group meetings, social media, one-on-one discussions, & announcements.
#4 Manage your Cash Flow by reducing Costs
“The one advantage that some Small Business do have, is that they have most likely built their business up by BootStrapping, so they know how to make do with less. As the businesses have grown, they start adding “luxuries” like offices, business travel, staff, entertainment, insurance, a bigger car, & countless smaller things to make their lives more comfortable. It is time to cut all discretionary spending !!!
Your Duty. Small Business has a civil duty to try and cut as few jobs as possible during this time. Cutting everything else needs to take priority before staff are affected. Negotiating with Banks & Suppliers for payment holidays, rebates, interest cuts & any help they can give – should be top priority. “This economic shutdown is not only USA, it’s global, so everyone is affected. Your Banks & Suppliers need you to survive this, as they too will be struggling. But they will struggle more, if they lose you as a client. Now is the time to use your Negotiation skills.
Special Attention should be paid to negotiating better payment terms with your suppliers, encouraging your customers to pay you earlier (through prompt payment discounts), keeping your inventory levels to a minimum and optimizing your expense structure. You should also reach out to your external investors (Banks & Financial services companies) & other shareholders to identify the most effective ways to address future Cash Flow gaps.
#5. Bootstrap as much as possible and revise- your Business Model accordingly
You need to review and optimize your cost structure and take all the necessary measures to align your expense forecasts with your revenue projections. Typical actions will include delaying all non-critical hires, stopping all non-sales related expenses, reviewing your in-sourcing and out-sourcing balance, letting go of your non-performers (bottom 5% of your workforce), taking a salary cut or restructuring the payment of salaries over the next 6 to 12 months – till the crisis will be over. You can also consider shifting part of your cost structure from fixed to variable through to deployment of performance-based bonuses or commissions while reducing your level of fixed costs.
#6. Continue to Operate (as much & long as possible)
This is not an extended Holiday. It’s the time to do what Entrepreneurs do best – Hustle. Be creative and find a way to continue operating. As much as you can, set up staff at their homes – using Computers & WiFi. Use some of these tools that can assist with remote working:
- Zoom, Google HangOuts or Skype to have Staff & Customer meetings
- Slack or BaseCamp for Instant Messaging
- Monday, Asana or Clickup for Productivity & Project Management
- Dropbox & GoogleDrive for File-Sharing
- Remo & GoToWebinar for Online Events
- Facebook, LinkedIn & Instagram for Online Networking
If your business is more production-based, find a way of maintaining some level of service, even if it is significantly reduced and you have to adhere to Social Distancing. Try to figure out ways to do this + wearing Masks, Dis-Infecting surfaces, etc. This way you are at least still delivering Products and keeping your Staff employed.”
#7. Diversify your Customer base
Product & Market Diversification is an effective way to reduce the impact of the crisis on your Small Business. It is recommended to list all the growth opportunities available, then prioritize them through screening factors – such as level of investment needed, related financial returns, strategic alignment with your existing business, easy of execution & level of synergies that can be generated. This is an important exercise that should be implemented in collaboration with the Management Team, Board & selected Advisors.
#8 Co-opetition is co-operating with Competition
Now is not the time to try and beat one’s Competition, but to reach out and see if one could share workloads, share knowledge + work together to try and survive this crisis. Rising tides lift all ships, and never before have we needed to co-operate to survive, then thrive !!!
#9. > Communication . . .
reduces anxiety about the future. Increasing communication with staff, suppliers & clients is very important. Remind your clients that you are still operational + there to help & support them. Some of your staff may be anxious, so help them through this time by being as open and honest with them as you can. It is ok to be vulnerable; you may be surprised how much support you receive. There have been many cases of companies where staff are choosing reduced hours and pay instead of laying people off at this time.
#10. Reach out to Advisors, Experts & Mentors
It is important during crisis to select a limited number of trusted, creative & competent people who will provide you with different perspectives on how best to prioritize and address your most critical Risk areas. Regular interaction with these will help you find the most suitable solutions for the challenges that you are facing.
Small Business often don’t seem to have the time to strategize due to heavy workload. Business owners should use this time to think of ways of how they will do things better when the slow down is over. Being “agile” is an ability that is best used within the framework of a strategy – to ensure that all elements of your business are being looked at during this time. There will be an opportunity to be part of the big rebound – after this Virus Crisis. Be prepared to be take advantage of it !!!
#12. Have your Contingency Plan ready
Develop different scenarios (conservative, realistic & aggressive) on the possible timing of the recovery, then identify the actions that need to be implemented for each of those scenarios with clear ownership & timing. You need to have the courage to take tough decisions during a Crisis – so as the ensure the long-term survival of the company & the quality of the partnerships with your key stakeholders.
#13. Read and Study
As an entrepreneur, your single biggest asset is you. Use this time to work on yourself. Read books or study online. There are several short courses that one could do while in isolation – all – to be more prepared to survive, then thrive !!!
#14. Strengthen your company Culture through your (+) Outlook
Always maintain a positive, can-do attitude during moments of Crisis – as all your stakeholders will be looking at you as a role model, then judge you on how best you live the company’s values during this transition period. Passion & faith are contagious, so make sure that you have plenty of it to share. Create a Commando spirit, share “quick wins” & don’t hesitate to reach out to your team members for special help & support.
#15. Strive, but don’t just Survive, Thrive !!!
Don’t waste a good crisis. We are all thinking about ways to survive this crisis, but we can implement some or all of these tips and came out of the Crisis – even stronger. “Perseverance, tenacity, creativity, determination & passion are traits synonymous with Entrepreneurs. Now is the time to call on all of them and not just Survive but go for Thrive !!!
Summary: Resilience & Flexibility
The above Crisis Management strategies are simple, concise, yet clear, and they provide an effective strategy for navigating your Small Business through this challenging Crisis. A crisis that is poorly managed can destroy years of consistent “value creation” in a few months. A well planned, well communicated & well executed crisis management framework will validate that your company has a solid foundations in place to address most of the challenges and risk factors that may develop in the future. Make sure that you adapt your crisis management framework to the evolution of the situation as the goal posts could move continuously. Resilience and flexibility are at the top of all virtues during these turbulent times.
Comments: Do you know of any other Actions to take when managing a Crisis?
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