Are you thinking about survival as a business? If so, you are making a huge mistake. This is war and you need to think about the strategies to win a war. Survival will be the result of winning the war against your business.
I want to give you an insight into some of the ‘war’ strategies many of my clients are using in their businesses during this time. Let me know if you have any others that can help us ALL during these unprecedented times.
1. UNDERSTAND THAT CASH IS KING!
Conserve cash at all costs. Let us be clear; businesses go bust because they have no cash to pay their liabilities. You must hold on to cash while the market and the economy recovers. Contrary to some commentators, the economy will not see a quick rebound. I am preparing my clients for an 8 -10 month recovery period. Others are even preparing for an 18-month recovery.
2. MANAGEMENT OF COLLECTION & CONSERVATION OF CASH
The process to conserve cash is critical. Some ideas:
- Many of you are furloughing staff and that is right and proper to protect those jobs. You will need that money to be conserved to pay them once out of lockdown
- Negotiate with landlords for rent reductions or deferrals. It is in their interest to protect you – it will be detriment to them if you leave or go bust, as the market for acquiring new tenants will be depressed. Consider reviewing other lease items like capital equipment and even vehicles.
- Negotiate any credit terms with suppliers
- Take advantage of the cheap government backed loans if you have a strong business case. Use it to bolster cash reserves
- On the flip side, be more assertive on collecting debts. Set up payment plans if necessary, reduce credit terms as appropriate. Do greater credit checks on those companies and suppliers who you sense may be in trouble
3. TEAR UP YOUR BUSINESS PLAN AND START AGAIN!
Understand that the business climate will change. Ask yourself, ‘Why should I exist as a business, am I meeting my customers’ needs?’ Consider asking yourself these questions:
- Should I pivot my business to meet the needs of my clients?
- Are the skills of my team relevant to ensure that the business meets the needs of my clients?
- Is my marketing plan still relevant? If so, am I reaching those clients effectively?
- How can I accelerate any new products or services to meet the needs of my clients?
- How much cash is needed to do all the above?
These are basic questions that will allow you to build a NEW business plan for the next year. This needs to be executed now, not when you come out of lockdown.
4. LEADERSHIP AND CULTURE
Any war event is dictated by leadership. How you handle this phase will determine whether you win the war or lose the war, your people and the business. Some thoughts on leadership and culture:
- Communicate the war strategy with your people. Be clear on the focus and their role in moving the business forward
- Communicate often. This is essential in a war. Get a grip on the numbers – publish to everyone daily, sales, debtors, cashflow etc.
- Identify and nurture your key people’s talents. They are the ones who will be the backbone in driving the business forward and out of this war. Disillusion them and they will leave – period.
- Get on the front line of the battle. Get closer to your troops, customers and suppliers. Be visible and vocal as a leader.
- Set the culture and tone of how you are doing battle. Compliment the troops often, motivate and incentivise if necessary. Show gratitude and give thanks often.
I could go on, but those you are prepared and active will win this war, retain your key people and preserve your business. Talk to the support personnel at the chamber or reach out to us on firstname.lastname@example.org. We are here and really want to help you ease through these unprecedented times.