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Regardless of the type of business or industry, COVID-19 and the economic chaos in its wake are almost certain to be some of the toughest challenges of every professional’s career. This is especially true for business owners, leaders and managers. There are some critical issues that should be addressed as quickly as possible to keep customers, suppliers, staff and the business afloat. Here are the top four suggested by top experts.
1. Be open and willing to pivot and adapt
Pivot may just be the most overused and hated word in business lexicon this year. But it is also the most on point. Inflexibility is the enemy in an emerging and urgent environment. The ability to shift and change, in a moment’s notice, is key. Companies must be willing to adapt products and services, or service delivery, to address the current situation.
As sheltering in place orders pose serious difficulties for businesses, especially B2C businesses that rely on face-to-face interaction with clients, companies must get flexible and creative about how to keep making money. The key is to ask: what do my clients need and how can our business position itself to provide those needs and be of value? The role of businesses now (and always) is to help customers solve a problem.
On March 23, 2020, Oliver Isaacs at Entrepreneur Magazine advised readers to:
“… get creative and brainstorm different ways you can still deliver your service or products. One obvious example is that of restaurants and cafes operating home-delivery only or offering free delivery, discounts, weekly or monthly subscription-style deals and other incentives helps to stay ahead of the competition.” https://www.msn.com/en-us/money/smallbusiness/8-ways-for-your-business-to-stay-ahead-during-the-coronavirus-outbreak/ar-BB11AlPm
Another example of pivoting might be to expand the products or services offered. That is what some restaurants in NYC did. Some cafes obtained waivers to be allowed to also sell grocery items. Items were placed on outdoor tables to keep customers from having to come into smaller or tighter spaces. Customers could purchase food staples in addition to freshly made food. Customer-centric title companies began to offer Virtual Closings to ensure that real estate transactions are able to move forward. Garment companies stopped sewing designer women’s wear and began to sew washable face masks. Ford began to use its manufacturing plants and skilled workers to produce ventilators.
Mac Paper, a company that mills and sells paper, has begun making and selling Disposable Masks for Medical and Non-Medical use as well as KN95 and KN95-FFP2 Masks for Industrial Use. These products are well outside the company’s traditional product lines, but invaluable for today’s marketplace.
Chinese companies, which faced the economic pain of shelter-in-place months before the rest of the world, were among the first to pivot and adapt. Based in Wuhan, China, Lin Qingxuan, a popular cosmetics company, was forced to close 40% of its stores in January. However, the company’s 100+ beauty advisors pivoted focus to digital platforms like WeChat to engage customers virtually. As a result, their sales in Wuhan achieved 200% growth compared to the prior year’s sales.
Those are all examples of pivoting and adapting. For each business, the type of “pivot” will be different and requires thought and creativity. The key is to stay nimble and responsive to ways to keep delivering service or providing a related service.
2. Communicate with staff and customers regularly and with transparency
Prioritize people and stay in close contact. The U.S. Chamber of Commerce recommends communicating with customers with great transparency and detail. Describe the steps the company is taking to mitigate risk. If staff is working at a location, explain why they are allowed in spite of any shelter-in-place orders and what is being done to keep workers safe. Then provide insight into the steps taken to keep physical items from begin contaminated.
In Harvard Business Review’s Ideacast podcast episode 672, Ryan Buell, Associate Professor at Harvard Business School, explained that:
“When customers are separated from the work that’s being done behind the scenes to serve them, they appreciate the service less and then they value the service less.” https://hbr.org/podcast/2019/03/make-customers-happier-with-operational-transparency
Here is an example of an email sent by a printer to its customers:
We Are Still Here to Serve Your Printing Needs
To all of our clients and partners.
As an essential business, Polo Printing is still open and able to service our client’s emerging needs. But we want to assure you that the health and safety of our customers and employees is a top priority when serving your print and mailing needs.
In this moment of social distancing, our facilities are well-positioned to run with minimal on-site staffing for production and with customer support and other administrative functions performed by team members working from the safety of their homes.
Our team members at our facility are adhering to distancing standards of six feet or more and we have designated staff who are disinfecting all surfaces continually throughout the day to ensure cleanliness and safety for our staff.
Hoping everybody stays safe and healthy.
3. Take Hold of all Finances
Whether it is a manager reviewing a department budget, a division leader going over current and upcoming expenses or a business owner or leader looking at the company’s overall cash flow, every person at a business needs to pay closer attention to money.
According to Deloitte, here are some of the practices and strategies they suggest:
Have every employee think like a CFO. For businesses selling physical products, have a robust framework for managing supply chain risk. Ensure business financing remains viable. Revisit variable costs and capital investment plans and conserve cash flow. Manage inventory to keep stock low. Extend payables, intelligently while managing and expediting receivables.https://www2.deloitte.com/global/en/pages/about-deloitte/articles/managing-cash-flow-during-period-of-crisis.html
In addition to pursuing government assistance and loans, small and mid-sized businesses should expand lines of credit. It’s better to have access to more credit than is needed than to be forced to close a business because there isn’t enough cash to survive the downturn.
Business owners should do cash flow planning, and hold on to as much cash as the business can for as long as possible. Liquidity is key. That means slowing down and/or reducing how much is being spent, while accelerating money into the business. For receivables, the goal is to get paid as quickly as possible.
Leaders should eliminate unnecessary expenses. Upgrades to equipment, facilities and software that are in the “nice to have but not critical” category should be put off. Do more with less. Instead of spending money on PPC and digital ads, have the marketing department leverage social media to stay top-of-mind and direct traffic to online sales (for companies that can offer products or services through their website). The goal is to hold onto cash as long as possible – without impacting operations, damaging key relationships or hurting the company’s credit rating.
Fulfill orders with a focus on reducing inventory on hand, as well as reduce the number of hours and number of staff it takes to fulfill orders, if the company does not qualify for or isn’t able to get funds from the Paycheck Protection Program. And when planning ahead for sales and inventory, be conservative in estimating numbers. In times of financial stress, sales cycles often stretch out as customers become more reluctant to spend.
If the business is still functioning at a high level – such as those that are deemed essential businesses — and the team is already working at maximum capacity, pay overtime or hire temporary workers before adding staff. This avoids the pain of laying people off if things eventually get slow.
4. Do a Competitive Analysis
What is the business’ competitors doing during this pandemic? New competitors may emerge during this time and old competitors may fade. Their capabilities may be augmented or blunted. It is important to keep abreast of market changes.
No one is suggesting to copy what competitors are doing, per se, but it can help to inspire ideas of what is working and what isn’t, and open the door to thinking about new and different ways to pivot. (See #1 above.) The truth is that some businesses are in worse shape than others, even when they are in the same industry. So look at the ones that seem to be managing the crisis proactively. What are they doing… and what are they doing differently than before?
It is important to look not only at direct competitors, but also businesses in related industries. This provides the best understanding of what others are doing and which strategies seem most effective. While some strategies may not apply across industries, take what is valuable and use it as fertilizer for inspiration.
Once a good analysis of the market has been done and a clear understanding of how the market has changed emerges, it is time to revisit assumptions about what the business is capable of, how customers are making decisions and who is the company now competing against. Changes in those assumptions may significantly change the view of what products or services to offer, how to best compete and what resources or capabilities are critical. There are a multitude of ways to adjust strategies and positioning of a business in order to survive and thrive.
None of this advice will ensure that any particular business will survive or thrive. As with any black swan event, the Covid pandemic is unpredictable, and there are no guarantees or assurances. That said, these are important steps to help tip the balance in favor of a positive outcome.
Quote of the Week
“Sooner or later comes a crisis in our affairs, and how we meet it determines our future happiness and success. Since the beginning of time, every form of life has been called upon to meet such crisis.” Robert Collier
© 2020, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.