COVID-19 and the Market Downturn: Ten things your business can do now to survive the crisis
For many small to medium enterprises, managing cash flows, variability in demand and daily operations is already a challenge. Many haven’t been ready for the aftershocks of a global pandemic. Barely back on our feet after the bushfires, COVID-19 and deep market volatility is threatening so many small businesses.
If your business wasn’t ready for the unprecedented level of market change, supply chain interruption, and states of emergency, you are not alone. There is lots to consider, depending on the size and nature of your business. Here are some common things you should be considering now:
1. Leading through a crisis
In tough times, leadership and culture matter more than ever. Under stress and pressure, we need to lead calmly, with courage and compassion. While our staff are practising social distancing or self-isolation, we will need to inspire connection to people and purpose. Our people and our leaders will need development and support to adapt to new ways of working in a changing, volatile environment.
2. Reset your strategy
We are experiencing an event that will require some businesses to re-think their strategies. While we need to respond, we also need to set our minds towards the creative process of imagining new futures. Moving from a reactive to a creative mindset is not easy during a crisis. However, stepping back and reassessing the future state, and the resources we have to get us there, is critical for business to rebound.
3. Manage cash flows and solvency risk
If cash isn’t coming in faster than it’s going out, you’ll need to make some hard choices. Put simply, there are two sides to this coin, earning more revenue and reducing expenses. Reviewing your operating model is a good start to consider how to adapt your business to continue to generate cash. This might mean moving to online distribution models or using your capabilities laterally to diversify your portfolio.
When it comes to reducing expenses while keeping an eye on the long term needs of your business, there are often short term measures which can reduce pressure without giving up your competitive advantage. For example, moving staff to a 9 day fortnight, or spreading an even wage reduction across staff to negate the need to lose talent.
Board directors have a duty to prevent insolvent trading. Here’s a link to an AICD article outlining key solvency warning signs for Boards: Getting through the coronavirus financial downturn.
So, why not ensure you and your team have created a space for wellness. Perhaps as a team you discuss and agree on some home/work boundaries around break times or meeting times.
4. Adapt your operating model
As foot traffic to the shops drops off and supply chains interrupt business, how can you adapt your business model to the changing environment? From looking at your channels to market, to your customer segmentation and value proposition, there is a range of ways you can adapt to the new environment. The most obvious is digital, and it’s important to consider the digital alternatives where social distancing and isolation are at play.
5. Consider your workforce
Firstly, it’s our duty to keep our people safe. We must consider how we can enable staff to work safely, and in the current environment, that often means remotely.
Secondly, one of the most enduring sources of competitive advantage is often your talent. Retaining and engaging staff while they work remotely, ensuring they can be productive, committed to purpose, and happy, will take rethinking people strategies.
Thirdly, to keep our talent in our network, we might consider how to keep the staff we can’t afford during times with tight cashflows. This could mean reduced working weeks or lower salaries as an alternative to losing staff.
6. Assess market impacts
For organisations with large investments in external markets, there is unprecedented volatility in the market. We don’t yet know what this will mean or where it will land, and it would be prudent for your organisation to run risk-based scenarios and consider whether the long term investment strategy is still right.
7. Use risk scenarios
The duration of the pandemic response, the market volatility, the future of our business partners are all unknown. It is highly worthwhile to run through potential scenarios with your risk appetite in mind. Understanding the future risks will unlock opportunities to mitigate impacts and may even uncover new ways to succeed.
8. Business continuity planning
If you don’t have business continuity plans, it’s time to get them in place. If you do have business continuity plans, it’s time to reassess and refresh them for a different context. This includes the process and systems changes that need to take place to transition your business from the current state to the future state – remote workforces, digital business models. This is proving harder than many expected, with IT infrastructure and hardware proving unreliable or unavailable.
9. Crisis management
Managing a crisis requires strong leadership and communication. It’s important to have clear messages for your Board, shareholders, staff, customers and communities. Leaders often need support during a crisis to ensure they get the messages right across all stakeholder groups. Engaging change management and communications experts can be hugely beneficial.
10. Ask for help
There are many community-minded people with goodwill who want to see Australian businesses and organisations survive and succeed. We all recognise that small to medium enterprises are the backbone of the economy. There are many sole traders, small businesses and large corporates who are willing to help. Seek assistance. If you are a NFP or social enterprise seeking pro bono assistance during the current crisis, contact email@example.com and we will help where we have capacity, or connect you with others who can.