Fighting Back Against COVID-19

Your Coronavirus Six-Step Business Game Plan

Stock prices are falling. Travel has been restricted. Public and private events are being canceled. Supply chains are shutting down. Public spaces are closing. Customers are staying home. Everyone is “freaking out”.

Some economists feel the coronavirus (COVID-19) will cause the biggest economic impact we have seen in decades, but as a business owner, you need to ask yourself… will you go through it or grow through it?

With the growing concerns over the impact of the coronavirus, I wanted to reach out with some thoughts on the subject.

When times get tough, people tend to react in one of two ways: some panic, while others step up to the plate and take a leadership role. Now more than ever, we will need leaders. I hope that is you.

Following is a step-by-step game-plan to help you lead your business through the coronavirus crisis. I hope you find it helpful.

STEP ONE – Make sure your people are safe

Many people are sending their employees home to self-quarantine, or are leaving a skeleton crew at work to handle essential services. If your employees are coming in to work, you will want to…

• Limit group meetings
• Remind people to keep at least 6 feet apart
• Wash their hands regularly
• Regularly clean frequently touched surfaces, such as door handles and boardroom tables
• Provide hand sanitizer and cleaning wipes
• And avoid touching their face (that one is harder than you’d think).

For more information, The World Health Organization has published a paper on getting your workplace ready for COVID-19 that you may find helpful.

STEP TWO – Communicate with your customers and suppliers

Once you have done everything you can to ensure everyone’s health and safety, turn your mind to the problem.

Remember, your customers are experiencing the same stresses you are. They are worried about their people, their business/work and their loved ones. Send them a note or call them to express your empathy and ensure them that you have a game plan for keeping your business running through this crisis.

Same goes with your suppliers. Communication is key right now. You need to know what you can expect from them as well. Are they still able to support their customers? Are they at risk of shutting their doors? What’s going on and how can you work together to stay afloat?

STEP THREE – Handle your Business

Before you can start planning how to go forward, you need to ensure your business can continue operating if your people can’t come to work. If your people will be working from home, make sure they are properly set up with the technology they need to do their jobs. Communication-flow will be critical, but most meetings can be run through video conferencing, and there are several low-cost or even free options for instant messaging.

Managing employees from a distance has its challenges, but it is considerably easier if you have proper KPIs (Key Performance Indicators) in place. Make sure your employees clearly understand how their daily productivity will be measured.

STEP FOUR – Create your Worst-Case Scenario Plan

I hate to say this, but now that your business is somewhat stable, it is time to plan for the worst. Assume you will lose up to 50% of your sales, and re-design your business around this scenario.

Ask yourself, in this situation…

• What would your organizational structure need to look like? How could you operate a smaller version of your business with less people?
• What HR changes would you need to make in order to survive? Make sure you understand the ROI on all your employees. Which ones are most critical for your success?
• How could you reduce your overhead expenses? Are all of your Purchase Orders critical? Do you have overhead that a smaller version of your business could do without?
• Could you renegotiate any of your inventory expenses? Even a small increase in gross margin can make a big difference to your bottom line.
• How might you reduce your real-estate requirements? Perhaps there is space that you could do without if you had to downsize.
• What would you do if your cash-flow dried up? Things are changing fast and you will need to watch your cash-flow like a hawk. Cash is what keeps your business alive.

It’s not a pleasant exercise, and I hope it doesn’t become a reality for you, but if things go sideways you will be glad you had a contingency plan in your back pocket.

STEP FIVE – Create your Plan of Attack

The cost-saving plan above is important, but in the end, you can’t simply cut your way out of a crisis.

The common reaction to a financial crisis is to hunker down and try to ride out the storm. The problem with this response however, is that we don’t know for certain how severe the storm will be, nor how long the storm will last. We proved that in the last recession when many businesses who tried this ended up closing their doors.

The uncommon reaction, however, is to create a plan of action and go on the offensive. My advice is to get together with your team (video conference if necessary) and brainstorm as many creative options as you can for putting your business on the track for growth. In other words, don’t just ask yourself, “how can I limit my losses?” Ask yourself, “how can I increase my profits?” You may or may not get there, but with the right attitude your odds of success go way up.

Leadership

In a crisis, attitude is everything. Be brave. Promote a sense of urgency (not a sense of panic). Lead your people and encourage them to lead each other. Use the crisis to strengthen your corporate culture and get everyone working together.

Look for ways to come together with other businesses and form alliances to provide more value to your customers. For example, maybe you can work with a technology company to enhance the value of your products or services, while giving them access to a new market.

If you have a healthy balance sheet, then tough times can also contain some hidden opportunities. For example, keep a watchful eye on your competitors. Some of them may be forced to lay off some good people that you could potentially pick up. There may also be an opportunity to acquire a competitor’s clients or even purchase their business, should they be unable to weather the financial storm.

Management/Human Resources

With more of your employees working from home, take the time to revisit your KPIs. KPIs measure results, and results are the only thing that counts when push comes to shove.

Consider upgrading or adding to the quality of your workforce. Sometimes it is more cost-effective to pay more money to fewer employees if those employees bring enough value to the company. If employees are working from home anyway, you might have an opportunity to access a larger employee market across the country… or even around the world.

If employee layoffs are unavoidable, what can you do to hold on to your best employees? Perhaps they can be shifted to a different position for the time being. For example, a supportive and positive warehouse worker might find a temporary home in the marketing department.

Marketing

Now that social networking and face-to-face marketing are at a standstill, ask your team for some creative input on how these activities might be replaced. For example, could you live-stream a virtual tradeshow? Could you add technology to your website to make it easier for customers to connect with you to ask questions? Could you host a client appreciation event online? Could you send samples of your products for them to try out? Customer service is critical, but in a crisis, customers are often more open minded to alternative solutions. So be proactive and give them options.

Look for new market opportunities. In a negative economy, some industries will struggle, while others will thrive. For example, as the virus has spread, many of our manufacturing clients have rapidly lost sales. However, many of our food service clients are experiencing a big jump in sales. Identify those markets that are doing well and see if you can find a way to serve them?

Finance

In a recession, the one with the strongest balance sheet typically wins. Get yourself into a strong cash position and stay there. If this situation goes on for any length of time, at some point your customers will likely begin stretching out their payables. If this happens, you’ll need cash to see you through. If you need a bridge loan or a line of credit there is a chance the banks will be more accommodating than normal, since many governments are providing loan guarantees. However, the longer you wait, the riskier it will get. My advice is to get liquid now, before it is too late.

Find out about the government support programs being offered in your area. Many governments around the world are implementing programs to support tax deferrals, wage reductions, worker layoffs, sick leave and so forth.

Your break-even number is the minimum amount of sales required to make zero profit. This is a critical number to understand when times are tough. Go below this number and you start to erode your cash position. Stay there too long and you’re out of business. In an economic crisis, it becomes a bit of a balancing act. Cutting costs will reduce your break-even number, but cutting costs too deeply could negatively affect your ability to market, or service your customers. This is why success in a negative economy is rarely achieved simply by cutting costs.

Operations

Other than staff reductions, which I have discussed above, the biggest operational challenge you’ll likely face due to the coronavirus is the disruption of your supply chain. Unless you source your products or materials locally, you may run into some significant challenges getting access to the goods you need to fulfill your customers’ orders.

Communicate with your suppliers and work closely with them. Remember, everyone is trying to survive. It’s tough to do, but try and avoid the chain reaction that happens when businesses start to withhold services and payments from each other. This only speeds up the negative downward spiral for everyone involved.

If you run out of products to sell, things will get pretty tough. Starting today, look for alternative suppliers. If you cannot get the products you need from your current suppliers, how else might you get them? Can you get something similar that will do the job? Perhaps there are alternative products or services that will work in the short-term. Can some items be manufactured by individuals at home? Are there out-of-the-box local solutions, such as small-town suppliers that might work? Unique partnerships can emerge from challenging business environments.

If this doesn’t work, try thinking even further outside of the box. In reality, your customers aren’t looking for a specific product. They’re looking for a solution to a need. For example, the manufacturer isn’t looking for a trucking company to deliver their goods, they’re looking for a transportation solution. So instead of your traditional solution (what you sold them last time), is there an alternative solution you might offer them this time that fills the need in a different way?

Technology may be one solution for this. Maybe it’s time to invest in robotics and artificial intelligence (AI). This is not a strategy to be undertaken without proper analysis and consideration of course, but technology is rapidly reducing the costs of production and customization for businesses of all sizes in all industries. And in a negative economy, you can sometimes get access to these technologies at a reduced cost.

Expanding your product lines can be another potential source of business. What else do your customers need that you might offer them? For example, if you sell factory heating and air conditioning systems, perhaps your customers would also be interested in ventilation or air cleaning systems… especially in this environment.

Sales

When times get tough, your secret weapon is to engage your entire workforce in sales. For sure not everyone will have the ability to close a deal, but everyone can play a role in helping to generate business. For example, they can support the sales team and keep them focused on selling by preparing quotes, sending samples, researching prospects, and so forth. It’s amazing what you can accomplish when everyone is united by a common goal.

In an environment where so many are working independently, it’s possible for salespeople to lose some of their drive and motivation. Technology is important, but when you’re working from home, it’s not hard to become over-reliant on tools such as email and social media. Sometimes you just need to pick up the phone and make a real human connection. As discussed above, setting proper KPIs will help keep everyone on track.

Give your customers every opportunity to buy. Ask the right questions to fully understand their needs, and then provide them with complete solutions. When you fixate on your products and services instead of your customer’s needs, you can end up missing out on a sales opportunity.

If your customers cannot come into your location because they are in quarantine, how can you make it more convenient for them to shop and purchase from home? Be easy to buy from. With in-store purchases almost gone, the “point of sale” experience on your website will be more important than ever. Consider creating a more engaging on-line presence. Is your website easy to use? Is your website easy to find? Would your customers benefit from an on-line community?

Relationships are always important in sales, but in a situation like the one we’re currently experiencing, they are even more important. Customers can become fickle in a negative economy. If service levels drop, they are often more willing to change suppliers. If you focus on providing world-class service, this can create an opportunity for you to capture market share.

And “last but not least”, make sure you ask for referrals. It’s easy to forget this one, and yet it can be one of your best sources of business… especially if you’re doing your job on the customer service side. Make it a priority to ask every client and even every prospect you engage with, who they know that you might be able to help. Then find a way to thank them when they respond. A small gift can go a long way towards keeping the referrals coming.

STEP SIX - Stay Positive

It is critical that you stay positive and strong in the face of this challenge. You are not alone.

• Call your accountant to make sure you understand your current financial health. How long of a runway do you have if things get tough?
• Call your banker to ensure you have access to the cash you may need to navigate this crisis. The more the better.
• Call your business advisor to develop your plan of attack for getting out the other side of this crisis successfully. We will help you get through this.

And finally, how can you think outside of the box, shift the rules of engagement, and maybe even prosper?

In 1665, the University of Cambridge temporarily closed due to the Bubonic Plague. Isaac Newton had to work from home. He used his time to develop “calculus” and the “theory of gravity”.

Now it’s your turn. What will you accomplish?