As the COVID-19 pandemic sweeps through our society, businesses must quickly change shape if they are to push through the crisis. A top-of-the-line Lamborghini may give you unbeatable performance on smooth city streets – but when you’re off-road and stuck in a storm, you’ll be much better off in a Jeep. In 2020’s rough business climate, the road ahead will prove once again that survival and success are all about how well companies can adapt to changing conditions.
The challenge is to determine the right steps for your business to take, and to successfully implement them when time is of the essence. The following guidelines in these key areas can help you bring your company to where it needs to be:
Cash management
Businesses need to free up funds and maintain a cash reserve in order to get through difficult times. Offering discounts to customers may get more money in the door, particularly if those discounts are tied to early payment. Government grants and tax concessions may also be available, if you know where to look. At the same time, you may be able to hold onto more cash in the short term by restructuring your payments to creditors.
Contingency planning
Potential disruptions to supply chains could put your entire business at risk. Review your operations to determine which parts can be slowed down and which need extra attention. Then, come up with alternative arrangements wherever needed to keep your necessary materials in inventory. Consider modifying your working processes to keep your staff in good health, and make sure you have a plan in place for every likely bump in the road as you go through this period of rapid adjustment.
Stakeholder management
Be clear and upfront with your stakeholders – letting them know where you are, what you need, and how you are going to get through the current period. This step will require extensive research and planning efforts, and may be facilitated by constructive engagement with tax authorities, lenders, landlords, and key suppliers. The more you can show that you are prepared for challenges and alert to opportunities, the more effectively you will earn their trust.
People
The central challenge of leadership is to determine how an organisation can get the greatest value out of its people. COVID-19 has forced most companies to radically alter their normal operations, but productivity can often be maintained if the right working processes are put into place. Even so, businesses may need to reduce working hours, or even put staff on leave, to remain above water. Regardless of what the best solution may turn out to be, know that when certain pieces of information aren’t available, rumours will take their place. Morale can only be maintained through regular and open communication between management and employees.
Setting up a crisis management team
To help top management avoid having to resolve every small issue that comes up, a special team can be appointed for making key operational decisions. This crisis management team should include representatives from every major department, so that it can look at every unexpected problem that arises, make the right determination about how to handle it, and then quickly communicate the necessary information throughout the company. Such an arrangement can free up other company leaders to think about bigger issues, like how to plan the overall business strategy moving forward.
Flatten the other curve, too
Much of the world’s attention has been focussed on the need to ‘flatten the curve’ of COVID-19. The logic is straightforward: We only have so many doctors, nurses, medical equipment and hospital beds, and so we need to reduce the rate of infection in order to stay within that upper limit.
The curve of the economic world may form something of a mirror image to the curve of the virus. As infections rise, people stay home and the economy falls. Even within the space of a single company, profit and loss may be traceable along a very similar path. A lower limit – insolvency – forms the ultimate boundary condition, and businesses must do all they can to stay above it.
Through smart adjustments at both the strategic and tactical level, this inverted business curve can be flattened as well. Financial shocks can be mitigated by moving assets and other ways of managing cash reserves. Suppliers, stakeholders, and staff can all be redirected to new goals, as long as a good plan is put in place and communicated clearly to all concerned. The path ahead is a slippery one – but with the right modifications and an experienced guide to help you find your way forward, you can find the road to success once again.
