Extraordinary times require extraordinary actions. Most successful businesses have detailed annual plans they are trying to execute each year. Unfortunately, unforeseen external circumstances may surface, which are completely out of their control. When these events materialize, they come through the front door of a business like an out of control freight train. They come in fast and tend to be very disruptive. These events have the potential to completely derail a business. It’s all about perspective, actions and leadership.
Bad news and good news. The bad news, it will be difficult and require a lot of courage to make some challenging decisions. The good news, those executives who take control and follow through making the necessary hard decisions will come out the other side on top. I’m suggesting having a unique perspective. How does an executive overcome this tragic reality and build a better company because of it? Life is a series of events; how we react or respond to those events is the difference maker. Are you going to let the event control you or are you going to take control of your response and actions? Some additional good news is also on the horizon. There will be greener pastures on the other side of this storm with fewer competitors. A lot of competitors will fail because they don’t take control and act in a timely manner.
Rule #1 — survive the storm. Sorry strategic plan, you are currently on hold. The priorities of a business have just changed overnight. Executives should not feel guilty putting the current year’s business plan and goals on hold. Leadership teams should be applying their focus and energy on the here and now. SURVIVE. It will not be easy; difficult decisions will have to be made. Executives who have the courage to embrace and act on this strategy will usually live to come out on the other side.
Talk is cheap; actions create results. Don’t delay. Most business owners tend to tell themselves, “Let me wait and see how long this is going to last.” With unemployment rates soaring upward, it will have a negative impact on consumer spending (i.e. countertops and flooring). A lot of industry owners and managers are commenting, “We are still busy …” Yes, businesses may still be “busy” cutting and fabricating jobs that were set in motion and purchased weeks and months ago. Once a company works through their backlogs, managers will start to panic due to the lack of jobs in the pipeline. The metric every executive should be focusing on now is new orders. In my conversations with many large retail sales centers the new orders metric has declined to 50 to 60% in the last three weeks.
Recommended actions to allow your business to survive the storm.
• Cash is essential, maximize the businesses cash position.
• If you have a line of credit – leverage it immediately.
• Reduce spending immediately (The biggest mistake companies make is not cutting their spending quick enough or deep enough).
• Payroll reduction – It is the largest expense line item and this decision becomes extremely difficult because people and emotions get involved.
Congress just passed a $2 trillion stimulus package; take advantage of it. The CARES Act has a large allocation towards unemployment relief. Both the company and its employees can benefit. Take the time to get educated on what is available.
• Look at each expense line item and ask yourself: Do we absolutely need this expense to operate and produce our existing jobs? If the answer is not “yes,” cut the expense.
• Negotiate with suppliers and vendors – Everyone is aware of the reality of the situation; your suppliers and vendors will be much more open to negotiations now compared to eight weeks ago.
Get creative on the revenue generation side of the business. There are certain customer channels that will not be impacted as much as others. For example, the commercial customer channel. Now is the perfect opportunity to evaluate your company and determine if it is time to diversify your customer base. The highest performing companies typically have a diverse customer base. They create an environment which insulates themselves to drastic market swings. The commercial channel will likely gain some momentum from the reduced interest rates and several other actions taken by the government to spark economic growth.
If your company ventures into new customer channels, I would recommend finding another company similar to yours in a non-competing market or territory that does well servicing the particular customer channel of interest. Ask them if they would be open to sharing their SOP’s and key performance deliverables for the specific customer channel.
Get out front and LEAD. True leaders shine during difficult times. Most people are in panic mode and freaking out. People will resonate to leadership that has the courage and transparency to stand up in front of the team and communicate the plan. These actions create a sense of unity, calm and comfort in an otherwise chaotic world. The biggest impact a manager/leader can have on their team is regular and transparent communication. Set-up a forum of communication (conference call, video, Zoom, social media, etc.). Transparently share with the team your plan to SURVIVE the storm and provide updates along the way.