We are certainly heading into a national and global crisis like we have not seen before. When parts of New York state are being quarantined by national guard troops, hospitals in Seattle stop taking patients, a ban on European flights is in place… You know the times have changed.
If you are curious about how this can play out take a look at South Korea and Italy where Coronavirus infections went from a handful of cased to tens of thousands. Why would the USA be any different? We are certainly at the front edge of this growing crisis.
You simply cannot run your business the same way today as you did a few weeks ago. The world has changed fast and you need to change the way you do things or risk long term irreparable damage to your company.
Normally company leaders who pursue revenues and profits relentlessly would be viewed as winners. People to be admired. But the rules have changed as they did during the 9/11 crisis and the 2008 financial meltdown. But this time may be even more of a problem.
It all boils down to one big question you need to ask yourself and your team…
How do you want to be remembered when the crisis passes?
What you do now will answer that question for your stakeholders up and down the value chain. From your employees, vendors, and investors to your most valuable customers, users, and fans… What you do over the coming weeks and months will define your company and your brand for many years to come.
What you say is important but what you do and how you do it will be even more important and could be the difference between long term company survival and slow withering demise.
Let me start by giving you a link to the Sequoia Capital letter that went out to their founders last week. Basically, this says the ride going forward is going to be a challenge. You need to change the way you do business.
But how can you actually weather this crisis in your business? What can you really do?
Let me make a few suggestions… All of these are focused on the answers you want to the key questions I posed at the top of this article, “How do you want to be remembered when the crisis passes? “
Everything you do starting right now should deliver on the way you want that question answered.
First… Let me make a few assumptions on the mechanics of business over the next few months. WARNING: This will not be easy to read:
- People will generally be scared and not ready to make any new decisions.
- Everyone will be experiencing reduced revenues and profits. It will be like someone just turned off the water.
- Assume all agreements for future revenues will be cancelled or reduced.
- Your vendors will be squeezed to keep their companies afloat. Your future business depends on these vendors.
- Your employees will be in a slight state of panic as your phones stop ringing and new business comes to a halt. They will even be more panicked when current customers start paying slower and cancel contracts.
- More and more of the people you depend on may be out sick or out helping their families in a time of need.
- The drop in the stock market and pressure on investors who depend on returns form bonds will add even more malaise to the crisis.
- The constant drum beat form the media about this Coronavirus will not slow down.
You need to decide if you are going to put your head in the sand and hope for the best or proactively make changes to your business to address the new realities ofn this Coronavirus crisis.
So, what can you really do?
Phase 1: Set the stage – If you are silent people will just fill in the quiet with their own inaccurate ideas.
- Reassure your employees (and their families) – Your employees health and well-being is the first priority. You must communicate that the company is doing whatever possible to make sure the workplace is safe. Things like daily wipe downs. Uber, taxi, or carpooling to get to work to stay off public transportation. Work from home. If you are sick stay home. No travel. If you must have office coverage, split team up into two two-week cohorts. One cohort works at home while the other is in the office.
- Reassure your clients – Make sure your customers, clients, community knows what you are doing for them and your employees to minimize risk from the virus. And assure them you will be operating the company as usual to deliver on your commitments to them.
- Reassure your vendors – Make sure your vendors, suppliers, landlord, and partners know what you are doing for them and your employees to minimize risk from the virus. And that you expect some impact to your business but you will keep them informed at every step.
- Reassure your investors – Make sure your investors know you have a plan and will keep them informed. And that you expect some impact to your business but you are not sure on the exact impact yet. Your priority is employees safety, client expectation management, vendor relations, and working with your team to be prepared for when the crisis passes to come out swinging.
Phase 2: Operating your company – You just can’t operate the company the way you have in the past. Don’t wait to make these moves. Waiting will only make things worse.
- Staffing – The last thing you want to do is make any staff cuts. It will be almost impossible for you to find the experienced staff you need when the crisis passes. See steps below for alternatives.
- Expenses – Reduce any and all expenses you can. Travel, non-essential benefits, even advertising/PR/Marketing should be cut to zero. All expenses should be considered for cuts.
- Deferring Pay – If the numbers still are tight consider deferring your pay and the pay of your team. By deferring the pay you agree to pay the deferred amounts at a later date when the company is able to write the checks. Deferred pay is certainly preferable to laying off and decimating a good staff. You will have a difficult time rebuilding a good team. Consider taking a 90% (or more) pay deferral for yourself. And ask team members to take pay deferrals based on their pay level. Example: Someone on the lower end of the pay scale will be less able to take a large deferral. You will be surprised how people will agree to pitch in.
- Vendors – Keep communicating with your vendors. Review committed to expenses and consider deferring the service or product or canceling it. Review your accounts payable and try to defer any and all payments as long as you can to conserve cash. Work with your vendors on a payment plan. Pay them something but cutting to 10% of the owed amount and a payment plan will help you through the crisis. Be sure to tell your vendors that you have taken a pay cut along with your team. Everybody is in this.
- Customers – Keep communicating with your customers. Expect them to want to cancel contracts, orders, and agreements. Work with them to change dates and set up deferred payments. And expect new prospects to be closed to any new business activity. Your new sales will slow significantly. Keep working the prospects but just to build the relationship.
- Setting up for the future – So new sales/revenues are going to Zero, current customers are cutting back, you are slow paying your vendors, and your cash is tighter than ever. What can you do now? Set things up for when the Crisis passes. Focus on things that will strengthen your organization and its offerings. Build up your content inventory, give your team time to improve their knowledge and expertise (most classes on Coursera are free) maybe even relaunch your website. Take the time to engage with customers and potential customers in no cost Co-creation of potential new products or services.
There are many unknowns lurking in this COVID-19 outbreak. Things are changing daily. By following the guidelines above you can hopefully turn a very negative situation into an opportunity to push your company to the next level.
And most importantly… How will your company and you be remembered when the crisis passes?