“In times of turmoil and uncertainty our greatest opportunities lie.”
The COVID-19 crisis is unlike anything previously experienced, and traditional crisis response approaches are insufficient. As a CEO or business owner, it’s critical to remain out in front with a variety of possible actions based on which scenarios unfold. Following are some strategies and tactics to consider:
MARKETING & SALES
(Both marketing strategy and sales need well thought-out plans.)
- The CEO must be heavily involved in the sales process.
- Remain proactive – continue to look for opportunities.
- Small to mid-size businesses can be nimble and react quickly – use this advantage!
- Employ an attraction process instead of a promotion process:
- Define and communicate your company’s niche or “unique selling proposition.”
- Only talk to people who will buy TODAY!
- Make use of Search Engine Optimization.
- Purchase lists of prospects who want what you are selling.
(Review with direct reports and your financial officer.)
- Cash is King. (Don’t run out!) Actual cash and cash headroom (includes your line of credit).
- Head Count: No “C” players allowed! Be proactive, and be creative to retain key people.
- Review your Balance Sheet and Income Statement. Scrub the P&L. Do zero-based budgeting. Remove all items that are not contributing to revenue generation. Selectively add back necessary items and look for large ticket items that might be re-quoted.
- After you’ve reduced overhead, review your cost structure to see how much you can reduce your selling price while maintaining margin. This will allow you to take advantage of price sensitive opportunities.
- Renegotiate your lease. Consider opportunistic real-estate acquisitions with seller financing.
- Consider contract employees instead of direct employees. Consider outsourcing.
- Follow key indicators closely.
- Look for lower priced alternatives for phone and data communications systems.
- Re-evaluate your healthcare plan. Consider higher employee contributions, co-pays, and deductibles.
- Take a hard look at year-end raises and bonuses. Can you really afford them?
- Understand client and product profitability. Make your unprofitable clients profitable, or consider an alternative.
(Involve key employees in the discussion. They own the plan with you when they participate in the process.)
- Define Best-Case, Worst-Case, and Most Likely Scenarios.
- Define the Most Likely Scenario and document actions.
- Define the Worst-Case Scenario (revenue drop) and document actions.
- What would it take to be cash flow positive?
- If you lost your bank and access to capital, what would you do?
- Do an exercise to determine what would put you out of business.
- Other Scenarios to consider:
- How would you handle large cost increases, including cost of money?
- What would a turnaround specialist advise?
- How much cash/access to cash do you need and for how long?
- Where would the cash come from?
- How solvent are your key clients and key vendors?
- Is too much of your business with too few clients?
- What can you shift from a fixed to a variable cost/outsourcing?
- If you are in a strong business (e.g. healthcare), how do you leverage your position?
- How can you take advantage of weakened competition?
- It is a great time for an acquisition or purchase if your balance sheet is strong.
- Stay in contact with your banker. Demonstrate that you understand your business and your financials.
- Don’t just stay with your primary representative. Get to know someone on the credit committee. Ask to be introduced “up.”
- Establish a relationship with a second bank.
- Maintain a separate cash account at the second bank.
(The leader should be a non-anxious presence in an increasingly anxious world.)
- Talk to everyone. Be seen connecting with employees and customers.
- Give information more than once. (This is critical internal marketing!)
- Be careful of too many “closed door meetings.”
- Leaders should remain connected with employees and should calmly discuss plans.
- Look for successes to celebrate.
- CEOs should go “back to basics.” Close the biggest deals. Get out and sell.
- These are challenging times. Be sensitive to fear and anger displayed by clients and employees. Listen and look for ways to diffuse negative reactions.
SUPPLIERS / CUSTOMERS / EMPLOYEES
- Shorten AR and lengthen AP (!) to increase cash flow.
- Watch inventory overload.
- Maintain regular contact with your best customers.
- Look for opportunities to negotiate price and terms with vendors, especially if your business is strong and growing. (The power is in the hands of the buyer.)
- Take care of your key employees.
- Now is a great time to find great talent.
- If you have the cash or access to capital, consider opportunistic purchases like equipment or other assets.