3 ways CEOs should NOT cut costs in times of crisis

One of the measures CEOs have to take right now is to manage costs, working capital and cash - as detailed in our CEO crisis playbook (https://www.dhirubhai.net/pulse/ceo-playbook-grow-faster-expand-profitability-during-times-gebele/)

We are sure, that you as a CEO are aware of all the measures you can take to lower costs...but we also think it is important to be aware of which measures NOT to take:

1. Stop paying rent in Germany - as Adidas did

• In Germany, a corona law passed: your rental contract cannot be canceled if you do not pay from March to June 2020. You will still have to pay later...
• Adidas, for example, immediately stopped paying rent in Germany for all its stores

Following the lead of ADIDAS would give you a short term working capital effect. But you may lose long term partners. In addition to that, this might become a PR disaster. Customers are already reacting, some stating that they will boycott ADIDAS now...

A better alternative is to talk to your partners and negotiate a solution.

2. Try to bail out of contracts with partners

One of our own customers tries to use a phony excuse to get out of a contract. He will not succeed but this ends a fruitful collaboration. Your reputation might get damaged and you surely lose a potential future partner that you might need when the first impact of the crisis fades.

Everybody is hit by the crisis right now, but we are sure that opening a dialogue with your partners and finding solutions together will enable both parties to get through this hard time together.

3. Stop marketing and sales altogether

Your B2B leads are still open to solutions. Their problems might have shifted, but as long as you provide value, you still get new leads and phone calls with decision-makers.

We know it because it is our core business at SAWOO and we still generate leads for our customers and ourselves. In fact, in some industries, the conversion rates are increasing right now!

In order to thrive, consider top-line and invest in growth...if you stop investing now, you will have NO leads in a few months...and thus no new revenue in 6-12 months...

Author

Sammy Gebele

Managing Director of SAWOO

[email protected]