I must have received at least 50 emails over the last week from different companies letting me know what they’re doing about the COVID-19 coronavirus.
The gist of all of the emails is basically the same. They’re keeping their networks running, tables clean, sanitizers close by, and staff safe.
Regardless of how you look at this, the world is changing, and fast. As a business owner, you need to start thinking; not just about the way you choose to communicate with your customers and staff during a crisis, but about the contingency plans you’re going to layout for your small business.
So, before I dive into communication and contingency plans, let me stress that first and foremost, you need to look after your family’s health and wellbeing.
Managing Your Business Through a Crisis
COVID-19 is a black swan event. If you haven’t already, you need to prepare your business for crisis management. This becomes even more complicated with school closings, as you now may find yourself having to look after the kids while making sure your business is still running smoothly.
As much as I would like to think that this problem is going to go away in the next week or two, I, unfortunately, believe that we’re looking at a one- to two-quarter disruption.
Every business will be impacted. You’ve already dealt with some of the repercussions. Your staff has asked you what the business is going to do. Your customers have likely already done the same, so, you need to have a game plan. I started this article by saying that I’ve already received at least 40 emails from different companies letting me know how they’re handling the coronavirus. As tiresome as these emails are becoming, what they signify is that these companies have formulated a plan. Your company needs to do the same.
Have you spoken to your staff? Customers? Do you have a game plan?
And by a game plan, I’m not speaking about how you’re going to clean the bathrooms and kitchens better or provide more hand sanitizer, but more importantly, how you’re looking after your network, what your staff contingency plans are, how you’re handling work from home, and so on.
One clever business owner, Amit Jhas, the CEO of Nown, put together a staff document that laid out what you could expect as the virus circulated through the community. He broke their action plan into 4 phases as follows:
- Phase 1: greater than 25 confirmed cases of COVID-19 in Ontario
- Phase 2: greater than 100 confirmed reported cases of COVID-19 in Ontario
- Phase 3: greater than 1,000 confirmed reported cases of COVID-19 in Ontario
- Phase 4: greater than 10,000 confirmed reported cases of COVID-19 in Ontario
In each phase, he discussed how travel plans were going to change and laid out the remote work and communication policies.
Here’s an example from phase 4:
“Management shall immediately establish a Critical Support Team Committee who shall prepare and deliver an Emergency Response Plan in the case our platform service is down; such plan shall detail the responsible team members and at least 2 other backup members;”
The document is 13 pages, and very well thought out. I am resharing this document with Amit’s permission. Nōwn COVID-19 Response Plan and Work From Home Policy
Creating a business plan for the duration of the crisis is significantly more difficult to address.
How are you going to manage your business through a possible 3- to 6-month cash flow and sales crunch?
Do you have enough of a cash flow cushion to support your business?
The answer to this will clearly depend on the nature of your business and what your cash position is today.
If you’re in the travel, restaurant, or hospitality industry, your business is going to be impacted significantly more than a SaaS business supporting B2B customers.
As an aside, my wife and I were in Panama last week (I am now home and 5 days into a 14-day quarantine), and of the total 100 rooms available, only 2 were booked. The silence was eerie.
Regardless of your industry, you need to address the cash flow.
No cash means no business, and when you need the cash most is most likely when it’s hardest to access.
Prepare a business forecast and look at what would happen to your business with a 10% and 20% drop in sales. Include the presumption that your AR could spike (as your customers may also be experiencing cash flow issues), which will make collections all the more difficult. So what does your cash position look like if your average AR collections go from 35 days to 55 days?
Now’s the time to amend your business forecasts and adjust your capital expenditures.
Cash is King
You’ve heard the expression cash is king. Well, it couldn’t be truer today.
The players with the most cash stand to do best in the near term. First, you’re in a better position to ride out the storm, and even more importantly, you’re in a better position to seek out opportunities that will arise.
Perhaps your competitor will be looking for a quick buyout.
Perhaps some awesome sales or technical talent that you’ve been wanting to hire for a while has just come to market.
I’m presuming that your business has some form of a remote work contingency plan—for example, IP phones for workers to work from home and video conferencing for work collaboration.
Now’s the time to enact those contingency plans.
I sold my telecom company in 2017, but I formerly ran and sold IP voice and video communication equipment that, among many other things, enabled companies to host their communications equipment remotely.
Hopefully, your business has IP phones for your remote staff with cloud-based CRM and email communication. If so, then now’s the time to make sure everything is working properly. If not, it isn’t too late to pick up a few hosted PBX extensions. Although I am clearly biased, Digitcom does an amazing job.
You need more than a work-from-home policy. Remote phones, video communication, hand sanitizer…you’ve heard it all before.
Your staff is looking for answers to bigger and more important issues.
- Will they be paid?
- How long can the business go on should sales slump 20% or even more?
- What is the financial position of the company?
- Will there be any layoffs?
- How is the business going to mitigate against a potential drop in sales? AR?
Your staff might not be asking you directly, but those are the things they want to know. Your staff is dealing with their own set of health, family, and anxiety issues around the current pandemic. Allay their fears by getting in front of the problem. Be upfront and honest. That’s what transparency is all about.
During the financial crisis in 2008, many of our vendors offered steep discounts for bulk purchases. We were able to acquire products for 30%—and even up to 50% off. If you have the cash, now’s the time to bulk up on larger purchases and even offer some of those discounts to your customers.
Many governments, municipal, provincial, state and federal, are making announcements that they’re going to support small businesses and workers during and after the crisis. What does that mean in your jurisdiction, and are there any programs that you can take advantage of?
Be a Leader
As the CEO of your business, you need to provide strong leadership. Yes, communication is important. That’s what your staff, customers, and suppliers see.
The hard work is the work that’s being done behind the scenes. The contingency plans. Thinking of where the puck is going to be and skating there. Skate there now—don’t wait for this to get any worse.
The following is a quote from Bill Taylor:
“The true mark of a leader is the willingness to stick with a bold course of action—an unconventional business strategy, a unique product-development roadmap, a controversial marketing campaign—even as the rest of the world wonders why you’re not marching in step with the status quo. In other words, real leaders are happy to zig while others zag. They understand that in an era of hyper-competition and non-stop disruption, the only way to stand out from the crowd is to stand for something special.
Figure out your special, and get there.
The market and people, in general, tend to panic during uncertain times. Just take a look at the grocery store shelves right now.
Society acts irrationally when faced with the unknown.
If you remain calm, have a plan prepared, and think pragmatically, then you will be in a position to take advantage of those opportunities.
The time to prepare your plan is now. Not in 6 months when you’re down to your last few dollars and are also panicking.
There is a phrase in Malay that goes, “Prepare an umbrella before the rain.“
Well, the clouds are coming in fast and the weather is looking ominous. Now is the time to have your plan prepared, and keep dry. Good luck.