In some way, shape or form, COVID-19 has put us all in a crisis. We have our own personal crises ranging from figuring out new home arrangements with children, school and work, to dealing with friends and loved ones who are at risk. We also have myriad business crises, from how to operate in an environment of social distancing and shutdowns to how to survive the next week.
The key principle to keep in mind is not to cut so much from your company now that it can’t survive down the road. You may have to make hard decisions, but make sure whatever call you make doesn’t end the future of your company. Many companies sold off their prize assets and divisions to survive the 2008 financial crisis only to be left with a shell of a company that wasn’t competitive once the crisis past.
Concentrate on the following four categories/pillars to survive your present situation, while preserving your company’s future.
Whether it’s your full-time staff, part-time team, contractors or any other relationship, your business is full of people you depend on and who depend on you. Keep the following in mind when you deal with them during the crisis.
• Be honest. Your team knows the company is in danger. They might even be more obsessive about reading outside news and trying to delve into the company’s future than you are. They are going to know if you are sugarcoating something. They will compare notes with their friends and colleagues at other companies. Whatever you do, be honest. Even if you tell the team you don’t have an answer, they will appreciate it much more than if you lie. Don’t risk the future trust of your team, no matter the potential short-term gain.
• Try to make cuts equitable. Odds are you will have to make a temporary if not permanent adjustment in payroll. It’s most likely your largest cost. Whatever you do, make the methodology clear and as equitable as possible. If possible, have your senior leadership take on more of the brunt than your junior staff. That will go a long way in preserving morale, and people will remember the sacrifices you all made for them once the crisis is over.
Disaster recovery, business continuity — it’s now time for those theoretical plans to be put into action. Keep your eye on necessary function and constant communication.
• Focus on critical process continuity. Keep your eye on the critical, and let the rest go for now. Customer fulfillment, collections and payroll are essential to survival. Concentrate on making sure those and any other essential tasks can be performed in whatever new normal your company is racing. Respectfully tell everyone what you are concentrating on and why, and let them know what will be slipping for the time being.
• Keep an eye on data security. Is your data safe? Taking processes and people remote that you don’t have current protocols for exposes you to possible data breaches. At a minimum, you need to communicate with your people as to what information they can share and what devices they can do their work on. Consult your IT staff as soon as you can to shore up your data defenses. Employee behavior is critical to keeping your data safe.
Almost everyone is going to be struggling with money. Make sure you keep on top of yours.
• Get a handle on daily cashflow. Model out all of your expected cash inflows and outflows on a daily basis, and project out between 30 and 90 days. Watch this like a hawk. Do not take anything for granted. Be on top of your collections. Be prudent in what you spend.
• Preserve your vendor relationships. How you treat your vendors in a crisis will dictate your future relationships with them. Ask for a discount or an extension only if you need it. Remember, one person’s expense is another person’s revenue. It’s an interconnected world. You do not get many chances to ask for better terms.
• Reach out to your customers. Your customers will care about two things: whether you will still be around to deliver your product, service and support — and their own survival. Reassure your customers. Stay inconstant contact, and work out payment plans with them if you have to. This is the time to build those relationships.
• Be careful when seeking new sources of capital. Be careful with your cash, and try to get as much of it as you can. Balance the need for cash with the terms asked. You won’t get the best terms for cash in a crisis. That’s fair since the lender or investor is taking on a larger risk with you. Decide what is fair, and keep to that principle. Borrowing from a loan shark, no matter the type of suit they wear or company they represent, usually doesn’t end well.
Tend toyour own and others’ spirit, or you’ll end up burning out. No one can sprint a marathon.
• Create morale boosters. Establish a regular cycle of staying in touch with your team and customers. Video and voice are more powerful than the written word.
• Embrace the new reality. Talk about the struggle openly. Be authentic, honest and professional.
• Use this time to get closer with people. The effort you put into your relationships now will be remembered for years to come. Take the time to talk to people; don’t just keep things on a transactional level.
• Balance deliverables with kindness and generosity. People under stress make mistakes. Productivity will likely be lower as people balance the chaos of their home life with the new work life. Cut people breaks, and let them know it’s OK not to be “on” all the time.
Crises, no matter how intense and scary, are temporary. This is the time for you to shine, hone your company and strengthen your relationships.