The COVID-19 virus has changed the business landscape seemingly overnight. There is no doubt that many businesses are not going to survive an extended shutdown of the economy, but I do believe there are steps leaders can take to give their businesses the best chance of making it.
I think there are four tools that can help leaders succeed: analysis, communication, teamwork and innovation.
With much of the economy literally in a government-mandated coma, rigorous analysis of expected cash flows is critical. It’s easy to get emotional about the business and the people, but that’s not where you need to start. Start with clear-eyed analysis.
What do cash flows look like over the next four to six months at expected levels of revenue and expense? Which discretionary expenses can be cut immediately? How much of your staff can you support without cash flow going negative and how deep a reduction in staff does your analysis indicate?
Those numbers may show you a very unpleasant picture, especially when it comes to people. But that’s not the end. Armed with those numbers, you can bring your desire to keep people whole into the picture. Do you have cash reserves you are willing to draw down to keep more people employed? Do you have access to credit and are you willing to borrow to keep more people on the payroll?
Recent legislation has enhanced unemployment benefits and provided low-interest, forgivable SBA loans to keep people employed. How could the use of these programs improve the picture for the company or its people?
All of these questions can only be answered with good financial analysis in hand.
Communication is critical at a time like this, especially communication with employees. People often fear the worst, and that fear is only made worse by silence from leadership. Treat your people like the adults they are. Avoid the urge to engage in happy talk, when you know things are going to get worse before they get better. If you’re performing analysis and you’re not sure what you’ll do, tell them, and give them a sense of when decisions will be made. If you need to lay some people off, tell everyone why you need to do that.
Explain to your people that above all, you must preserve the business, or there won’t be any jobs for anyone. People can understand that. They won’t like it, but they’ll understand it.
Teamwork is critical because in times like these you can’t be the lone savior of the business. You need your team. At the top level you need managers and others to help with the analysis. You need them to brainstorm scenarios, actions, solutions. At all levels you need everyone working together more than ever. You’re in the same boat. Every oar must be rowing in the right direction and with the right pace.
Innovation has the potential to be at least a partial cure. Every day we read about businesses which innovate to keep cash flowing. Auto manufacturers making ventilators gets a lot of press, but it isn’t just big companies that can innovate.
Here in the York area, bus company Bailey Coach created a new service. Using disinfecting equipment and processes it uses in its buses, it disinfects all kinds of indoor spaces for other organizations. One Hospitality Group centralized food preparation using the menus of its four restaurants. Meals are available for takeout or home delivery, soon to be augmented with food truck deliveries to entire neighborhoods.
Don’t panic. Analyze, communicate, use your team, and innovate. It’s your best chance.
Richard Randall is founder and president of management-consulting firm New Level Advisors in Springettsbury Township, York County. Email him at [email protected]