COVID-19 has and is unimaginably changing life and the world as we know it. Everything that we have come to accept as normal in our personal and business lives has been turned upside down. The uncertainty has created overwhelming fear, panic, hysteria and anxiety. Many have already lost their jobs with a lot more losses still to come. We’re told that this is a health induced economic crisis and, no-one really knows how long this damn virus is going to hang around. What we do know is that consequences for our economy, many of our businesses and almost everything that we have become used to in life has now changed.
It is also really clear that, without a vaccine, social distancing and social isolation are the only options to stem the spread, contain and eradicate this deadly virus. And, only then will some form of order and normality be restored.
Economically, there is universal acceptance that we are in for some unbelievably hard times, particularly for anyone involved in providing non-essential products and services.
Some of the big questions being asked are:
In this article, I offer some thoughts and a few tips on how to approach and deal with these big questions. I hope you find this helpful.
One of the world’s greatest ever thinkers was Albert Einstein. Throughout his amazing life, Einstein searched for an understanding of and meaning about the world around him. He was successful in many facets of life. He was creative, innovative and able to see connections with between things that other mere mortals thought just happened by coincidence.
One of Einstein’s great insights about life and the world was his “Three Rules for Life” and, as we all try to find a way to navigate our way through this “Armageddon” like crisis, these rules are both enlightening and reassuring.
Four of the many attributes of the great strategic thinkers and leaders of the world are that:
While the meteoric pace of the changes and impacts to life, business and the world at large may have taken many by surprise, it doesn’t take an Einstein to know that now is not a time for complacency, for burying heads in the sand and just hoping that everything will sort itself out.
Apart from the health and safety of everyone in the community, which is rightly being given the highest priority, developing a financial survival plan that keeps our organisations going through this time of crisis and limits the adverse financial impact is an absolute critical priority.
Some of the steps that the business and industry leaders are doing to right now are:
Forecasting is never a perfect science and even in normal times, it’s not an easy task. And, right now, amidst all the current uncertainty, it’s probably even more difficult than usual. Nevertheless, having a thorough understanding of cash inflows and outflows is absolutely critical in making the right decisions at the moment.
A good place to start is to redo your revenue forecasts. Based on the best guess estimates from health professionals and the government, it’s going to take somewhere between 6 and 9 months to contain and get this virus under control. This being the case, my suggestion is to assume that it will likely be 12 months before business gets back to some semblance of normality, so business and industry leaders need to be acting now to understand how they will be placed over this timeframe.
In redoing your revenue forecasts, be realistic but conservative with your assumptions, look at what’s happened since everything started to change and, for additional prudency, envisage and develop a worst-case scenario to provide a minimum base line for decision making purposes.
Once you’ve completed your revenue forecasts, proceed with your expense forecasts. These will typically be more controllable and a lot easier to assess.
If your organisation’s cash outgoings exceed your revenues and/or you expect revenues to decline, make sure that you have sufficient cash or access to funds (e.g. bank loans/lines of credit, government support, etc.) to see your way through the current crisis. If you have any doubt about this whatsoever, reach out to your financial and professional business advisers for support.
Even if your organisation has sufficient cash or availability of funds to see its way through the next 12 months, if your organisation’s monthly cash flows are negative, don’t delay taking immediate action to reduce operating costs to slow down your cash burn rate.
Some options to do this include:
And, as always, reach out to your financial and professional business advisers for support if you need to or if you are in any doubt.
The typical response to all the fear, panic and uncertainty emanating from COVID-19, is to “hunker down” and to prioritise strategies and plans to manage and mitigate downside risks. This is entirely appropriate right now. It would be foolish and irresponsible not to be doing so.
However, amidst all the current short term adversity confronting businesses and industry leaders, there are and will be strategic opportunities that will definitely be missed with too much “short termism” and introspection.
A number of smart business and industry leaders are already currently focusing not just on threats to their organisations, but also on the strategic opportunities that are emerging and will emerge from the uncertainties that this global health emergency is presenting.
Interestingly, out of necessity, most businesses have been forced to innovate on the run, particularly in setting up remote work options for their employees, despite this being endlessly discussed and debated in business circles for many years. I guess only time will tell, but I wouldn’t mind betting that with remote work options having been forced on much of the business world, greater, more flexible work options will become a lot more prevalent once this crisis is over.
But what else can be done to identify and consider additional strategic opportunities amidst the current chaos and uncertainty?
For some organisations, with business activity dropping off a cliff and likely to stay that way for the foreseeable future, this will free up time for leaders and others in the organisation to allocate more time to thinking about and planning the future.
A good place to start is to instigate a strategic planning process that helps to determine what’s happened and is happening in your market(s) and looks for opportunities to leverage the organisation’s strengths and to shore up any gaps/weaknesses that may have been limiting progress.
The strategic planning process is often run as a workshop or series of workshops (virtual workshops work too!!!) involving leaders, managers and team members from across the business. At the workshops (and afterwards), a range of questions/topics are discussed, debated and considered, key priorities are agreed, action plans are developed, accountabilities are allocated and monitoring and review processes are put in place to mobilise and align the efforts of everyone in the organisation towards its future desired state.
Some of the typical questions/topics explored in a strategic planning process include:
Even if now is not the right time to instigate a new strategic planning process, my tip is to not wait too long to, at least start the thinking part of the process.
The ancient Greek philosopher, Heraclitus, said 2,500 years ago, “Change is the only constant in life”.
The good news is that all this current chaos and uncertainty will also pass and order will eventually be restored. It won’t happen overnight, but just as night follows day, it will happen.
In the meantime, there will be some seriously stressful, challenging and bruising times in many organisations. But, as they say, there’s no gain without pain.
With the right approach, the right thinking, and a laser-like focus on what really matters both now and into the future, I’m confident that most of us will come through this crisis stronger and better positioned than ever.
Stay safe, stay healthy and stay positive.
Strategy, Change Leadership and Business Transformation Specialist
If you would like to know more about Guy and his Strategy and Risk Management workshops, please visit this link.