This has been a week like no other.
I am working remotely from my home in Wales, which for me is quite normal. What isn’t normal is that my entire team is also working from home, meeting online every day and wearing out Microsoft Teams.
And we’ve been working around the clock – and on weekends too – to support our clients, as together with companies around the world, they try to adjust to the economic devastation wreaked by COVID-19.
I’ll leave it to others to talk about the horrifying human cost. Suffice to say that our hearts go out to anyone whose health has been affected, and to their loved ones.
But this has changed everything – everything! – for businesses too, and I can honestly say I’ve seen nothing like it in my entire career.
One of the challenges is that the situation is so fluid, that no long-term planning is possible. In normal times, even during a deep recession, when you do financial planning and forecasting, you have facts on which to base your assumptions.
That is not true in this environment, where conditions are shifting dramatically day-to-day. Companies are forced to be almost entirely reactive, adjusting their plans daily in reaction to news announcements and other developments.
So what, under these circumstances, should your business do to get through these first few days and weeks of national emergency?
Of course, the answer is highly personalised, so I can’t offer any bespoke advice over email.
But there are 4 principles that every business should keep in mind, which I’m going to share here…
- Save money where possible. Many businesses are absolutely fine, financially, right now. Your short-term position might also be solid. But you may still face big challenges over the coming months, if your supply chain breaks down or if demand drops if the lockdown lasts for several months.
- Plan for “after”. It’s hard to believe right now, but one day normality will return. (It may not look exactly like ‘normal’ did before, but this lockdown will not last forever).
- In that spirit, continue your marketing! You may be tempted to cut your marketing costs, but one of the biggest mistakes companies can make right now is to cut their marketing altogether. If you are to have any hope of picking up again when this is all over, you need to continue talking to your clients and prospects right now, or you’ll be starting from scratch later in the year. And that means that recovery will take a lot longer. Study after study shows that companies that continue marketing during a recession do better, not just during the recession but in the years after as well. Granted, this is not a regular recession – in previous slowdowns, consumers could still leave the house – but the principle remains the same. Find ways to continue nurturing your leads….
- Beware of loan schemes. There are a lot of grants available right now, to help businesses bridge this period, but make sure that you’re not loading your business up with debt that will make things very difficult later in the year. So be very cautious and savvy about any loans you take on, and consider whether there are other ways of generating income. Loans may turn out to be your only option, but it’s not ideal.
Your cashflow issues may not become apparent until autumn or winter. But given how difficult it is to make assumptions right now, these scenarios are entirely possible. So save money where you can, so you can be prepared for this eventuality.
When that happens, there will be a lot of pent-up demand. There will be many opportunities…. …If you’ve spent this time sensibly, structuring your business so that it will be as easy as possible to re-open when that day comes. This means that it is probably not sensible to do anything too rash (like firing all your staff). You need to think ahead, to make sure that you can get your business back on its feet as quickly as possible when the time is right.
It bears re-iterating – don’t do anything rash! When the situation changes daily, what’s right for your business today may no longer be right next week.
So take plenty of advice from whoever you normally consult (business mentors…. Finance directors… Senior colleagues and so on). Get plenty of detail, if possible, before making any big changes, and try to make your decisions as flexible as possible, so you can adapt again next week.
And above all, take care of yourself, your staff and your loved ones. And stay safe.
