Covid-19 is a unique virus; the human impact of the pandemic is heartbreaking. And the scale of the economic impact is clearly going to be huge.
But, in whatever way the economic situation develops in the coming months, it’s important to remember we’re not powerless. There’s plenty we can do as leaders to wrestle some control back of our businesses and prepare for the post-pandemic world.
I see three main phases businesses need to go through in the coming months.
- Realisation and protection
- Consolidation and prepare for relaunch
- Launch with new business model, improved cost base and more engaged team
In this article, I’m going to concentrate on Phase 1, which is where we’re at right now. The bottom line is we need to focus on the areas we can control, rather than wasting time and energy worrying about what we can’t control. To help us create a short-term plan and stay on track, I’ve created this short term ‘Coronavirus Crisis 1-3-5 Plan’.
Phase 1 is tough because there’s so much we can’t control. But we can make a difference by focusing our thinking on three critical areas: cash, team and customers.
Cash is king for any business. Fortunately, the government has been pretty proactive at helping small businesses at this time, with the furlough scheme, various grants and deferred tax payment schemes.
And there are a host of things business owners can do to manage cashflow better.
- Look at how you can reduce the time it takes customers to pay you.
- Consider discounts for early payment or advance payment.
- Send out invoices immediately the work is done and not at the end of the month.
- Set up retainers, which can improve payment predictability.
- Call clients a few days before bills are due to remind them.
- Assign cash collection to one of your senior team, or consider outsourcing it.
As for slowing down the rate at which cash leaves the business, start by paying due invoices on the very last day. You could also ask some suppliers for improved terms – though in these difficult times, I’d recommend being sensitive to the needs of your suppliers (note the bad PR supermarkets receive for how they squeeze their suppliers). Less contentious tactics could be asking the supplier to bill you at the end of the month, asking for a discount for higher-volume purchase, or asking for a discount to pay earlier.
Meanwhile, supporting our team through this challenging time is critical. Some of them will be fine – those are the same people that tend to cope well with any form of change. But others will be fearful and we need to support them. Now is the time to be increasing internal communication, taking more time to have those 121s, and making sure everyone feels engaged with the company’s plan. Make no mistake, your team is watching you closely to see how you’re behaving in this crisis. If you handle it well, you’ll come out the other end with a tighter, resilient and more engaged team.
And lastly, customers need our focus. Firstly, I think it’s a good time to call your most important clients and just check in to make sure they’re okay – and, importantly, do it with no sales agenda. No-one wants to be sold to by an opportunistic salesman at this time. When you call them, be sure to listen, because there’s a good chance they’ll have a problem you can help them solve. So think in advance what you can you do to add more value? How can you help them stay positive? Where can you go the extra mile?
These are the big areas I feel you should be thinking about at this stage in the crisis. If you can focus on these three key objectives, and try and keep a positive longer-term perspective, then I’m sure you’ll be better placed to come out of this the other side in good shape.
24 April 2020
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