Rapid Response Plan for navigating Unchartered Waters

We need to be realistic and accept that a recession is likely due to the effects of Covid-19 – the question being how deep and how long. We are hoping for a ‘V’ or a ‘U’– downturn, then bounce back in the LUV model. However, experience tells me it would be prudent and responsible to “Plan for the Worst, Hope for the Best”.

As a CEO, what does this mean for your business and what is the new reality of demand? Some businesses that I am speaking with have seen a 50% collapse in income in the last 4 weeks. If your business is unaffected by the crisis or you see an upturn in demand – for example tech for Videocon, delivery businesses, loo rolls (!) then you need to be planning to meet increased demand in the short-term. However, if your business has seen new business collapse, cancellations or customer delaying decisions due to Covid-19, then you will have worked out already, you need a new plan. To be blunt, if your projected revenues are in double-digit decline, previous plans should be discarded. In fact, all prior plans are redundant. You need a new plan – a plan for business survival and to see your business emerge stronger for the long-term. Critical is business survival, preservation of cash and keeping your core employees motivated to deliver exceptional service through these challenging times. As always, “fail to plan is planning to fail”. As the leader, you need to create a rapid response plan to deal with the new revenue reality. This would be time well spent over the weekend in the lull before another storm next Monday. If your bookings or revenue is dropping, then you can’t put your head in the sand. As a leader, you cannot be a rabbit (or in USA, a deer) in the headlights. In some countries, there is a ‘lock down’ – there may be Government help (loans, grants for small businesses and support for keyworker sectors) and you should apply for any help but don’t just rely on the Government or carry on sleepwalking. In extreme situations if the Government does ‘lock down’, you may need to effectively ‘mothball’ the business during the crisis and the additional challenge is that the crisis is open-ended, where no-one has a crystal ball.

I have been advising CEOs over the past few weeks on developing their own unique Corona Survival Business Plans to ‘baton down the hatches’. In addition, many of the VC/investors have provided helpful advice – Sequoia insights is one example where “Having weathered every business downturn for nearly fifty years, we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. In downturns, revenue and cash levels always fall faster than expenses. In some ways, business mirrors biology. As Darwin surmised, those who survive “are not the strongest or the most intelligent, but the most adaptable to change.”

I know you will be running at 100mph at the moment increasing outreach to customers and caring with compassion for the well-being for your employees as many of them work from home (WFH). However, it is imperative to your business survival that you reset the revenue/top line against the new reality and develop the options for reducing expenses accordingly and preserving cash. Once again, Cash is King & Queen. You will need to haircut 2020 revenues by your expected worst case, then model cash and expenses against the new revenue scenario. Then remodel the baseline of fixed, variable and cash expenses – create an action plan against the menu of options. Get a small team of your key trusted executives to rapidly develop the new Plan for Success.  I will talk more in the coming blogs on how to reduce expenses rapidly, maintaining the focus on customers with the maximum compassion and consideration for employees whilst balancing the long-term interests of your business.  As a CEO, I have had to do this in previous downturns and for many of us, it is part of the job where folks talk of 'hard decisions' – there are ways to be compassionate through the process and get back to a cash positive, viable business. In one case, we reduced operating expenses by 55% in 6 weeks. At another time, we, as the Executives took a 1/3 salary reduction and forwent bonuses to share the pain with a strong statement of ‘we are all in this together’. It’s much easier being a leader in growth times, but in these times of crisis, this is your time where as a great leader, you stand tall. It is vital to remain calm, data-driven, decisive with clarity of thought matched with awesome follow-through execution of the revised plan to navigate through Corona crisis. Sadly, weekend work for leaders again. Now is the time to be the best CEO and leader that you can.