By Jim Talerico,
At a recent Zoom Town Hall conference on which I served as a panelist entitled “Navigating Through the Turbulence,” the Moderator, Dr. Gerald Turner, identified five steps for positioning one’s small business for success as we emerge from the Covid-19 “sheltering in” order. These five steps include: (i) understanding the turbulence & disruptive forces at play, (ii) evaluating the health & well being of your business, (iii) developing a recovery plan to best leverage your resources (iv) reviewing & reinventing your business model for the long haul, and (v) executing your plan for the journey ahead.
I agree with Dr. Turner’s five steps, as well as his three models for understanding the forces at play that he outlined in the first step of this process, which include economic factors, pandemic or people factors, and business factors.
With respect to the economic factors, we learned last week that in the first quarter of 2020, GDP in the US shrunk by 4.8%. Given the inevitable continuation of this trend in Q2 2020, in two months, we will officially be in a recession. At minimum, recessions lasts six months, and businesses are already bracing for this economic downturn.
I believe, the current recession will be much like the one following 9-11 as opposed to the last recession, often referred to the credit crunch, which resulted from a systemic problem with the financial markets. Like the recession following 9-11, this recession is the result of a fear caused by an international crisis. The economy recovered after 9-11 as soon as people felt comfortable that there was a solution to keep them safe; and, I feel, that when we have a vaccine for Covid-19 that will be the “security moment” that ultimately turns around this crisis.
Important factors shaping the human or pandemic part of this crisis include: (a) medical testing and scaling solutions — involving Covid-19 testing, antivirals, antigens, and a vaccine; (b) CDC guidelines — which dictates things like social distancing, and good hygiene; (c) federal, state & local mandates — including federal and state initiatives such as Phase One, Phase Two and Phase Three guidelines and local orders requiring the wearing of masks; and (d) “micro” and “macro” people issues. Examples of “micro” issues include employees and visitors who feel sick, keeping older & high-risk employees safe, employee problems caused by sick family members, and/or childcare issues, while “macro” issues include decisions about layoffs, furloughs, and working from home.
When discussing business issues, I argued the company’s financial situation is of paramount concern followed by the issues dealing with the business’ employees, customers, suppliers, and other stakeholders. Moreover, it is important to note that the solutions for each business could be different. Because we are all going through this pandemic together for the first time, keeping up with the latest news as we emerge from this crisis is also especially important.
To evaluate the health and well being of your business, I would break the business into several different parts. First, I would look at the company’s financials and determine the answers to the following questions:
- How much money does the company have in the bank ?
- In light of this crisis, what will the company’s sales forecast look like for the next six months ?
- What does the company’s A/R Aging report look like given the crisis ?
- What are the company’s borrowing capabilities today ?
- What does the company’s A/P Aging Report look like ?
- Are there opportunities to defer payables if the company needs to do that ?
- What other obligations does the company have to satisfy in the short-term ?
- What obligations can be renegotiated or deferred ? and
- Has the company applied for either the PPP or EIDL loan programs offered by the SBA as well as other grants and lending sources ?
Then, I would pull out the company’s strategic plan and budget, if they exist, to check the business’ assumptions and contemplate adjustments to both. Knowing the answers to the above questions will allow the business owner to make better future financial decisions.
To move forward, I would next pull out a blank piece of paper and across the top of the page I would list each of the business’ functions — e.g., finance, operations, sales, shipping, engineering, R&D, etc. Down the page I would list week one, week two, week three, etc. and then I would get with my management team to set weekly goals & objectives and outline contingency plans for possible problems.
With regard to customers, I would try to meet their immediate needs and would continue to stay close to my biggest customers throughout the crisis. I would offer discounts where practical, and consider payment terms to keep sales coming in. If sales from existing customers slow, I would contact past customers, introduce new sales & marketing approaches, and reach out to new market niches.
It is estimated that nearly 33% of businesses will experience supply chain issues, so I would make lining up alternative suppliers and substitute products a priority if your business is vulnerable to possible supply chain disruptions. After minimizing the risk of supply chain issues, I would turn my attention to possible concerns with other stakeholders.
When developing a recovery plan to best leverage the company’s resources, I believe that business owners need to make sure that their plans remains flexible and focused on mitigating risks. By staying in touch with one’s banker, CPA, attorney, business consultant, insurance agent, and other advisors, business owners should be able to prevent most problems. In addition, businesses should keep their eye out for short-term opportunities and reallocate resources, as needed, to maintain customer service. Communications is a two-way street, so, last, business owners should make sure that communications travel from the top down and from the bottom up.
Reviewing and reinventing your business model for the long-term, has short-, intermediate- and long-term considerations. In the short-term, as previously mentioned, concerns include financial needs, employee needs, customer needs, supplier problems, and mitigating risks. In the intermediate-term, business owners need to be asking how they may need to adjust their strategic focus and reallocate resources. Business owners should also be checking their budget and break-even point. Companies will likely need to adjust to on-going and long-term trends, such as:
– economic recession;
– higher debt and costs of capital;
– higher unemployment;
– more reserved spending;
– the need to introduce new sales and marketing approaches;
– the possibility of managing more remote workers:
– stressed government institutions, resulting in budget shortfalls and reduced services;
– less globalization, more on-shoring: and longer-term,
– fears of inflation; and
– the possible rise of new pandemics and disasters,
Where there are problems, however, there will also be opportunities.
During WWII, Eisenhower said: “plans are worthless, but planning is everything.” To properly position one’s business for the future, business owners need to be actively engaged in planning to successfully negotiate this crisis. The company’s employees should be involved in planning, so adjustments can be made in a timely manner. Finally, business owners should not overlook the business’ employees. I propose that business owners consider rallying employees around incentives as a way of rewarding them for their assistance making it through this crisis.
Now that we are all past the adrenaline phase, it is time to roll up our sleeves and get working again. Hopefully, Dr. Turner’s approach and the ideas summarized in this article will help guide you on this journey.
About the Author
A nationally recognized small to mid-sized business (SMB) expert, Jim Talerico has consistently ranked among the “top small business consultants followed on Twitter.” With more than thirty – (30) years of diversified business experience, Jim has a solid track record helping thousands of business owners across the US and in Canada tackle tough business problems and improve their organizational performance.
A regular guest on the Price of Business on Bloomberg Talk Radio, Jim’s client success stories have been highlighted in the Wall St Journal, Dallas Business Journal, Chicago Daily Herald, and on MSNBC’s Your Business, and he is regularly quoted in publications like the New York Times, Dallas Morning News, Philadelphia Inquirer, and on INC.Com, in addition to numerous, other industry publications, radio broadcasts, business books, and Internet media.
Jim Talerico is a certified management consultant CMC©, an honor bestowed on only 1% of all consultants worldwide. He is also the founder and CEO of Greater Prairie Business Consulting, Inc. (For more information about his practice, go to: www.greaterprairiebusinessconsulting.com.)
Increase your knowledge of the latest small to mid-sized business (SMB) trends by tuning into Jim’s regular appearances on the Price of Business !
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