Keep your head above the water

This image says a lot. She has her head above the water, not by much but enough so she can still breathe. Enough to keep going and enough to keep functioning.

The past few weeks have been testing, to say the least. The virus has the world's attention, people's minds and for some, their bodies, in its grip. More than that, it has crippled most economies around the world, especially leisure, tourism, hospitality are in serious trouble. In extreme cases, companies have shut, temporarily or even permanently, leaving in their wake a trail of financial hardship for those who worked there. Immediate consequences were often felt by those most vulnerable: employees and freelancers. I've spoken to a friend whose climbing centre shut down overnight, with an email and a phone call to employees not to come back tomorrow as the company has shut permanently. 40 people lost their job overnight. My friend has some savings and can survive for a few weeks but beyond that, it's going to get tough. Who's hiring now?

This article is a reflection on what's been happening over the past few days/ weeks. Our organisation, Hatch has gone 100% digital over the space 2-3 days. To stay in touch regularly, we implemented a daily "coffee morning", a 15-min Zoom call to check in with each other, see how we're doing. We've also moved our weekly staff meeting to Zoom and have a daily check-in and check-out on Slack. As soon as we were all set-up, we started running Entrepreneur-focused webinars online, instead of running them in physical locations and we're offering daily "Office Hours" on Zoom for entrepreneurs who want to talk about what they are doing right now and whether they need support with anything. We're also digitising all of our programmes and are testing what works.

Moving our business online seemed straight forward for the most part but only because we have worked hard for years to make sure that in an emergency situation, systems and processes are set-up to work remotely. We have been using digital tools like Slack, Zoom, Google Drive etc for years. We adopted these measures as part of our general work, and to support those who have caring duties and by making working from home (WFH) easy. Also, having a digitally savvy team really helps, with internal capacity and staff for web design and programming, never having outsourced this part of our business. This meant we got on top of our business quickly, transitioning away from being in one office to being together online, only.

This made me realise that - we are ok - we haven't been put in survival mode by the current crisis. We shut the office before it became 'good practice' to front-run what was going to happen anyway. Whilst we all listened to official guidance, we made our own decisions and executed them, like so many other businesses did too.

We did double-check our cash-flow when this situation occurred. We knew where we were and what our run-rate is. In fact, we've got two run rates (1) cash at hand/ in the bank (divided by monthly overheads) and (2) contracted, with funds outstanding (divided by monthly overheads).

Mentally and organisationally assured that we are going to be ok for now, our attention quickly shifted to the people we serve - Entrepreneurs, especially diverse founders and women. Here, the picture was very different.

Many founders we spoke to are in shock and their finances in serious disarray. Many have lost all revenues due to shuttered venues or because people aren't allowed to go outside and buy from them. The majority of businesses we spoke to have got a month of cash flow in the bank (about 80%) and need to make some serious decision about their future, now.

Keep your head above the water

My habit of reading a book a month is still strong and the urge to read (physical books) provides sufficient balance to an increase in 'screen-time', especially now that we're going into 'lockdown' and are WFH, with no in-person meetings for the foreseeable future. I've been reading "Antifragile" by Nassim Nicholas Talib for a few weeks now. He's the guy behind "Black Swans" (large but unpredictable events). "Antifragile" is one of the best books I've read over the last few years. The concept is very simple. Things are in one of three 'buckets' (below) and things can also move from one to the next.

You can apply this concept to people, organisations, the economy, society. In the current situation, people, organisations and systems are quickly establishing themselves in one of the three brackets: fragile, robust/ resilient or antifragile.

Workers, especially freelancers or those in specific industries have quickly found themselves to be very fragile in the present circumstances, as did organisations whose income was linked to people visiting their venues or purchasing things directly, say in-store.

Dealing with the current situation

If you've not already checked or are generally on top of knowing where you are against securing your basic needs, all the things in the bottom of Maslow's Hierarchy of Needs (shelter, food, safety), check again. Linking this situation to swimming in an ocean, the worst will be drowning.

What do you need to do, to not drown and what do you need to do to support those around you (e.g. dependents, staff, freelancers) so nobody is drowning in your immediate circle. Are you able to take a short dive below the surface? What capacity do you have to hold your breath for some time, financially and health-wise (mental/ physical health are equally important)? How resilient are you to cope with additional stress and can you implement mitigating actions? What would they look like? How can you secure survival in the short and medium-term for yourself and for those that depend on you within your actionable influence radius? Here are some of the things we have suggested to entrepreneurs to increase their temporary resilience and reduce fragility (and exposure):

• Fully understand your financial situation and do some financial modelling develop a worst case, base case and best-case scenario. (If you need help with this, we've got many people who can help)
• Communicate with key stakeholders. It's important to keep people informed. For staff, Hatch has always advocated for radical transparency and radical truthfulness. If you have staff, this is the time to openly share with them where you and the company are at. If you've got to make hard decisions, involve those who will be affected.
• Reduce fixed costs like rent (re-negotiate with landlords) and business rates (speak to your local council), check which suppliers need paying, negotiate payment terms where possible. If you've got loans or are in receipt of social investment, check the Good Finance "COVID19 Resource Hub" (excellent source of advice/ support)
• Keep your staff, don't let them go, if possible, reduce the number of days people are doing so you can stay afloat for longer, with all your staff members still receiving some funds vs some being singled out and let go. Similarly, if you're working with freelancers, speak to them, how secure are they what can you do for them, can they generate value for you in a different way? The government's "furlough" scheme is in operation for 3-months and for some of your staff this will be the best option.
• Shift your activities online, if possible.
• Explore emergency finance via a crowdfunder or start a go-fund-me page if things get dire (they're not a magic wand and will take time, plus lots of people need money right now). But beware of the cost of running a campaign as it is timeconsuming to design it, run it, market it ...and people will be cash-strapped too.
• Watch out for government support to kick in. We're updating this page every few days to inform entrepreneurs on support schemes. If you've got premises and are in receipt of reduced rates (charities, social enterprises), there's a potential ï¿¡10K grant you can apply for from your local authority (local council).
• Keep yourself accountable and continue to check in with people. We're running a daily "Office Hours" for entrepreneurs to check in on how they're doing.

What is important at the moment is to specify a timeframe for any actions and their effect to materialise. Can you do some basic scenario planning: assess the current situation (for yourself/ your family/ your organisations), understand what securities are in place (bank balance, things you can turn into cash, like outstanding invoices), what is your run rate, what mitigating measures can you implement and what is the likelihood of success for implementing and achieving mitigating measures (e.g. factors & dependencies). Key thing is to keep it simple. Here's a simple way of looking at some possible scenarios (external) and how you can respond to them (your plan). Feel free to make your own with relevant numbers for you/ your business:

What measures have you taken to keep your head above the water?