Many of you are ready to look ahead and turn the corner after the tumultuous times caused by COVID-19.
Our Deal Network sponsor (CSG Partners) have provided us with 7 steps to really “get ready”.
And make sure to catch the upcoming webinar that will talk more about the diversification options of your portfolio (another way to prevent challenges in the future)- Business ownership and the risks of portfolio concentration
Get ready for the restart
The Coronavirus epidemic has brought an abrupt and unexpected change to the operating environment. Even if your company wasn’t impacted financially, the human toll on your staff, customers, and partners has likely been a management challenge in and of itself.
Here’s the good news: this too shall pass. Market recoveries followed the 2007-08 financial crisis, the 2001-02 tech bubble burst, and the 1987 market crash. We should expect the same in this instance of economic turmoil. But companies navigating the current crisis can’t simply run out the clock and await their silver lining. Instead, now is the time to get ready for the restart with some careful planning and a bit of soul searching. If you’re looking for a roadmap to develop your post-Coronavirus strategy, consider the following steps.
1) Acquaint yourself with the CARES Act.
The sweeping federal stimulus package, passed in late March, contains a number of low-interest loan and grant opportunities for small and mid-sized businesses. Consider that the typical company only maintains cash to cover operations for 27 days. In a normal environment, that may seem fine, but things have changed. Among the resources made available by the CARES Act, you can now apply for a loan, with generous repayment terms, to cover a variety of short-term expenses like payroll. For details and application information, visit the SBA’s Coronavirus Resources page.
2) Don’t give up on new business.
Every sector deemed critical by federal and state authorities (healthcare, energy, defense, etc.) is investing large sums of money in repairing, upgrading, and building new facilities and infrastructure to help them deal with this crisis. The CARES Acts has set aside funding for related projects, which could produce a consistent pipeline of work for the foreseeable future. Keep an eye out for new projects where you can deploy resources.
3) Get your finances in order.
If you’ve always sought to bolster your accounting and financial reporting functions, but daily business kept getting in the way, now is the time to take on these projects. A credible financial dashboard is your most important tool during a crisis. Keep a close eye on your working capital and quick ratios and be honest in your assessments. If problems are looming, don’t wait until you miss a payment or find yourself in an unmanageable cash crunch. Financial institutions and non-bank lenders are generally willing to strike forbearance agreements, make loan modifications, or provide other solutions, including short-term funding, during market downturns. But remembers, timing and candor are critical. When you leave your financial partners in the dark, they may read the situation incorrectly. That can have consequences.
4) Maintain open communication with your clients and team.
During difficult times, everyone is feeling additional stress. Your clients need reassurance that your product or service will be delivered as usual. If those commitments can’t be kept, they need to hear why and when they can expect fulfillment. Setting expectations, based on the best information you have at the time, is good practice. Meanwhile, your employees need clear guidance. Your rank-in-file should hear what you’re doing about the situation and how it may impact their livelihood. Top associates need to be informed and properly empowered to communicate on your behalf, whenever necessary. The more you can keep an open dialogue, the less you leave up to speculation and the anxiety of your stakeholders. And when you maintain relationships with your stakeholders during difficult times, the stronger the relationships will be once you pull out of the crisis.
5) Spin up some internal projects.
If you can keep your staff working and engaged, even if they’re not directly interacting with customers, that’s a good thing. Use this time to perform overdue maintenance, cleaning, or any other projects that have gone by the wayside because you were too busy. The more you can do to be prepared when things turn, the faster you will be able to service your customers and generate new business. Get your sales materials, office space, inventory, and equipment ready to spring into action.
6) Prepare your business for the next crisis.
Start by re-evaluating your capital reserve. Is your current cash position manageable? Would you have been better served by a more conservative strategy? If you’re dissatisfied with the answers to either question, be prepared to engage your accountant, financial advisors, and banking partners for some constructive solutions. You’ll likely find answers in budgeting tweaks, balance sheet modifications, and your lending arrangements.
7) Take a hard look at your wealth concentration.
Are your personal finances diversified, or are your holdings heavily weighted in your business? Many business owners have most of their net worth tied up in their company. Times like these reinforce the theme that having all your eggs in one basket doesn’t always work. The economic environment comes in cycles, and once the window to gain some liquidity opens again, you may want to take the opportunity to diversify your wealth out of the business. Don’t miss the next window. Take the time now to consider minority sales, dividend recaps, and employee stock ownership plans (ESOPs).
The sad fact is not all companies will survive this crisis, but if you’re resourceful, prepared to do some planning, and if you utilize available resources, you stand a much better chance. If you’re able to get through this thing, there will be unique opportunities to capture market share and further new partnerships that would never have arisen otherwise.
Focused on becoming better leaders
My members and I are also here for you. Today we have 13 business owners focused on becoming better leaders, making better decisions. On the morning of July 15th, we will have a Colleen McKenna, Vistage Speaker focusing on “Using LinkedIn for Business Development, Recruiting and Branding” with us for 2 1/2 hours.
Email me if you would like to be part of this Zoom session. firstname.lastname@example.org
Continued successes and please stay safe