According to research, the average cash on hand for America’s small business will last for only 27 days. No doubt the coronavirus pandemic has put business in a crisis situation which will take much more than 27 days to navigate. That is why leadership matters more now than ever.
History shows that some managers will continue to operate in panic mode but the best will accept this as a tough business challenge and find new ways to innovate and keep moving forward. Even though it’s not business as usual, making productive use of this time can position your company to soar when things get back to normal.
A Harvard business study revealed that although many companies manage to struggle through a severe economic depression, 7% of them emerged even stronger than when economic conditions were good. This was largely due to management decisions that were made early in the recession and adjusted as needed to to fight through the downturn. Learning from this experience, there are steps you can take now that will not just allow your business to survive but to find ways to capitalize on the post-crisis recovery. Here are some key steps we share with our clients.
Commit to keeping your business solidly operational throughout the crisis.
This is the first and most important step to take. The impact of COVID – 19 has been profound and the shock is being felt by the entire economy. Your commitment to staying operational becomes your North Star, a guide to help you stay focused through the crisis. This will help position you as a leader and give your team and customers confidence that your company can weather the storm.
Act quickly to get financial help if you need it.
Loans and grants can take time to process so it’s very important to act quickly. The government, as well as other organizations, are offering help to small businesses during this time. You may qualify for help from the government through a small business disaster relief loan. In order to be eligible you must be a small business with 500 employees or fewer, with some exceptions in select industries. Among other things, it can help with expenses for rent, utilities and payroll. Under the proper circumstances the loan will be forgiven and treated as a grant.
You can check it out and apply here https://disasterloan.sba.gov/ela/
Stay close to your customers.
It’s important to inform your clients about how your business has been affected by the pandemic and how your company is adjusting. Be honest about what they can expect in regard to service and supply and assure them that you are working hard to address their needs. Social media is a quick and inexpensive way to keep them updated.
Take time to Learn how your clients are adapting.
Covid – 19 is causing everyone to make changes. Finding innovative solutions to your customers’ new problems could reveal an entirely new opportunity and revenue stream. Crisis is often the catalyst for innovation.
Tighten up your spending
Many businesses are facing significant revenue declines. It’s common sense to review all of your expenses and determine those that are fixed and those that are discretionary, but do so judiciously. According to a Harvard Business Study, companies that cut too fast and too deep had the lowest probability of pulling ahead of the competition following a recession.
Consult with your team before cutting
One common mistake is to leave cost cutting to the accounting department which can have a limited view of your business. Every cut has unintended consequences and so it is important to bring the wisdom of your team together so you can make these decisions based on the knowledge of various departments.
Look for innovative ways to save money
Businesses that were successful in the last recession found innovative ways to save money rather than simple cost cutting. Talk to your team about finding efficiencies in your day to day operations. How can we continue to do things but do them cheaper, faster or better?
Be careful about cutting advertising and marketing.
Studies show that failing to support your marketing efforts will often jeopardize future sales and leave you behind your competitors when the crisis is over. Instead of eliminating advertising, try to make it more efficient. Consider trimming costs by changing your media mix. It may be prudent to cut back on traditional ads and increase your exposure on less expensive forms of advertising such as digital. Develop an aggressive social media strategy . Review your current advertising commitments and look for ways to renegotiate. Ask about free and low cost opportunities your advertising vendors may be offering to help their clients get through a business slow down.
Encourage your people to discover what works best.
Managing through a crisis requires agility. Stay open to new ideas and encourage your team to find ways to innovate and operate more efficiently. You never know where the great ideas will come from. Acknowledge good ideas and encourage your team to keep thinking!
Even if you are working 24/7 and most of your employees are working remotely, it’s important to be visible. People need to know you are leading them through this disruptive time. They are stressed as well and will benefit from a little direction and inspiration. Consider regular video conference meetings with your team but keep them short and to the point. Even a simple text or email at the beginning of the day can be a great leadership tool. “Good Morning. It’s great to have you on the team. Let’s make this a great day.”
The best leaders know that a crisis has a way of revealing the strengths and weaknesses in a business. Plan now to use this information when the crisis comes to an end. As tough as the COVID -19 pandemic has been, it can serve as a guide to help you build on your strengths and shore up the areas that proved to be deficient.