These are challenging times for family businesses. The strength of the family, or lack thereof, is abundantly clear in times like this. Business is brutal and takes no prisoners, setting up some family businesses for more than hard economic times.
If the family is equipped with resilience, is committed to the long run, they will figure out how to bounce back. Here are six practical, implementable strategies you can start on today with your business.
1. Confront the brutal facts
In Jim Collins book, Good to Great, he tells the story of Admiral James Stockdale who was a POW during the Vietnam War. Collins notes, “It just seemed so bleak—the uncertainty of his fate, the brutality of his captors, and so forth…how on earth did he deal with it…?”
When Collins asked that very question directly to Stockdale, he replied, “I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade.”
Collins followed with another question: “Who didn’t make it out?”
“The optimists. Oh, they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart….
This is a very important lesson. You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.”
Face the reality of your crisis. The sooner, the better. Once you have faced the situation and taken stock of the situation, the next step becomes clear.
2. Key people aligned.
Business is won and lost by the strength of the team, especially the leadership team. As the leadership team goes, so goes the company. Let the leadership team have a voice in the plan going forward, because they are going to be the champions in the field. As a team you can win. Divided, not so likely.
3. Communicate to key stakeholders
This is no time to hide from the bank. Get them involved as soon as possible, sharing with them your plan, what you have done to date, and keep them informed. Banks don’t like surprises. And the same with your customers. Talk to them and assure them you are making the changes necessary. And then deliver.
4. Improve cash flow.
Cash is the fuel to keep the business running. Look to strategically cut expenses, plug ‘cash leaks’ throughout the organization, and work on improving your cash conversion cycle.
5. Define a strategy beyond survival.
Don’t just plan to survive. Pick a horizon you want to get to, and start planning how to get there. One step at a time. Your strategy shouldn’t be a complicated, thick document that no one understands. We will survive. So for a moment, put aside the bleakness of the moment, know that there will be a tomorrow, and envision what you want your company to look like then (5 to 10 years out). Then develop five key thrusts or capabilities you need to accomplish over the next three years to move towards that vision. Break those three-year key thrusts and capabilities into five priorities over the next 12 months that, when accomplished, move your towards the three-year key thrusts and capabilities. Finally, break the annual priorities down into quarters to create a rhythm for accountability and execution. We have a one-page format that will allow everyone to fully understand where the company is headed, how it will get there and assigns accountability for those actions.
6. Disciplined execution.
Probably the most important component of a turnaround is fanatical, disciplined execution. Execution happens when accountability exists, when there is follow up, and when problems are solved. This simple process creates momentum and THINGS GET DONE! Disciplined execution eliminates drama creators, like poor quality and late deliveries.
Additionally, coming out of this very strange time of quarantine, think of your business as a “re start-up.” Customer behaviors have changed. People have grown very comfortable online. Don’t assume that when you open your doors, they will be clamoring to get in. Get your marketing hat on, talk and listen to customers, test ideas, and modify/change/introduce new products and services as necessary. More than ever, innovation is going to be key to succeeding in the New World.
Follow these six steps with a growth mindset, a steady march forward, an unwavering commitment to meet goals, and you will find yourself progressing each day, with profitability and success soon to follow.
Tom Garrity is managing partner at Compass Point Consulting LLC in Hanover Township, Northampton County. He can be reached at firstname.lastname@example.org.