Six On Center — Six Covid Coping Tips For Business
Be the species most responsive to change.
Performance, responsiveness and results matter… it’s Darwinian; the businesses that will be standing on the other side of this pandemic are the ones most adaptable to change. Beyond embracing change, they must be proactive and communicative.
Whether they are publicly-held, privately-held, or private equity-held companies, businesses have had one C, COVID-19, giving them another C, Challenge, in the form of two other C’s, Crisis and Chaos, and what they need is another C, Control. Calm (yet another C) comes from feeling in Control.
Businesses can feel back in control by focusing on what what we call the “Six C’s:”
1. Manage Cash. Forecast inflows, outflows, based on a worst-case scenario. Be conservative. Liquidity is your lifeline. Diversify your cash and make sure you have resources in case your bank branch is closed. Draw down raw materials and inventory and convert them to cash through incentive pricing and volume discounts to customers.
2. Manage Costs. Cut all unnecessary expenses. Cancel debit and credit card charges and auto debits that are getting paid automatically. List expenses and categories of expenses in terms of priorities — taxes, utilities, payroll, e.g. Prioritize, prioritize. Snacks, trade shows, and office cleaning services aren’t priorities.
3. Manage Credit. Reach out to creditors and ask for relief. Stretch out obligations and payments in installments. Ask for interest only payments. Tell them you’ll be late. Keep up with minimum payments. They will understand.
4. Manage Communications. Communicate with stakeholders. Stakeholders include your vendors, customers, employees, your advisors and service providers, and anyone who pays your business or anyone your business pays. What is your message? It’s also a great idea to communicate with your competitors to share resources, best practices, and establish common goals and understanding.
5. Manage Continuity of Core Operations. Make a list of what must keep happening, on what level, when, why, and where. Group personnel into key core personnel and nonessential — hint, look at the categories of labor — generally direct and indirect employees in manufacturing and service are critical to output, where SG&A employees are generally linked to sales and administration. Ensure that you still have a business. Don’t slack on things like taxes, registrations, permits, regulations, compliance. Continue core, scaled back operations. Focus on what is absolutely necessary.
6. Manage Customer Expectations. Speak with customers regularly and offer to help them, and, ask for their help. How you treat your customers in a time of crisis, when their crisis is your crisis, determines what kind of relationship you’ll have with each other long into the future.
There are financial support resources out there now, but aside of those programs which may be exhausted, or may be a temporary fix, managers and business owners will be best served by strengthening the fundamentals of the business, managing stakeholder relationships, innovating through new and different ways to generate revenue, provide products and services, and most importantly, communicate proactively with “upstream” (vendors, lenders, e.g.) and “downstream” (customers, business partners) and by paying attention, the “Six C’s” can ensure a stabilization and eventual rebound.”
Oh, and while we’re at it…one more C- be Creative.
Copyright, 2021, QORVAL Partners, LLC and/or Paul Fioravanti, MBA, MPA, CTP. No part of this article may be reproduced, shared or distributed or posted in any form without the express written consent of the author. All rights reserved.