Doing business in a pandemic: 5 things you should be focusing on right now
"May you live in interesting times" is an English expression which purports to be a translation of a traditional Chinese curse. While seemingly a blessing, the expression is normally used ironically; life is better in "uninteresting times" of peace and tranquility than in "interesting" ones, which are usually times of trouble. (wikipedia reference)
These most certainly qualify as “interesting times!
”My clients are asking me what they should be doing to minimize the impact of this pandemic on their businesses and I suspect that you’re wondering as well.
As such let me offer a thought or two about how to negotiate the days and months ahead.
As a business owner, what can you be doing today to be the best you can be given the current circumstances?
To get some insight, I turned to a McKinsey report which offers some ideas on what to expect and what we can be doing.
First of all what can we expect going forward, here are 3 possible scenarios according to their report:
In their BEST case but least likely scenario, we will be back to normal by the end of the second quarter or the end of June. In the most pessimistic case, Consumer confidence remains low, and air-travel restrictions remain in place until late 2020. Given what is happening in the world stock markets, this worst-case scenario is becoming evermore likely.
We can probably expect a slowdown or recession in the economy.
What does this mean for you and your business? Here McKinsey offers a 7-step plan:
How does this list apply to you?
When it comes to the people in your business, let’s remember the advice of Spike Lee: “do the right thing." Now more than ever, your people will be looking to you to set the tone. Treat your team right, and they, in turn, will treat you and your customers right.
Speaking of which, what can you do today to bolster your sales and marketing? First of all, in protecting your current revenues and then what new initiatives can you take on? As another supposedly Chinese saying goes, in every crisis, there is an opportunity. How can you reframe the current events to create an opportunity for you?
Protect your cash flow. Get your A/R up to date while you still can. As you can imagine collecting late receivables now will be tougher than ever. Be the first to reach out to your customers to get on top of their list. How about your invoicing? Is every last invoice out the door, get them out promptly!
If you don’t yet do cash flow forecasting, now is the time to get ahead of the curve. Here's a 13-week cash flow forecasting tool. The instructions are on Tab 1.
The most important and hardest thing of all is to build some contingency plans. Businesses that have been around for many economic cycles, find that the hardest things to do is to make timely, necessary and appropriate decisions in a market where massive changes occurring.
Do some contingency planning:
What does your business look like if sales decline by 20% or perhaps even 40%?
What expenses do you trim at each of those thresholds?
What staff cuts must be made?
Make those decisions now while you are in the best position and mindset to make them.
When or if the time comes, it will be more comfortable (but still not easy) to take action because you carefully considered all the possibilities while you were of a mind to do so. At least then it won’t feel like you are in constant crisis mode.
While these may be interesting times fraught with peril there is also opportunity.