Every company goes through difficult periods to test our ingenuity and business resilience.
Words: Steve Murphy
In the last 20 years alone, UK businesses have survived four major economic shocks – the dotcom crash (2000), the 9/11 terrorist attacks (2001), the global financial meltdown (2008) and the UK’s decision to leave the EU (2016).
But coronavirus is different – the scale, severity and speed of change is unprecedented. This crisis requires new thinking. Your current focus is likely to be “just getting through” this – here we offer some advice and tips on how to stay focused, stay productive, and plan for the longer-term.
Where to start
The best crisis managers strive to move their team away from the adrenaline-charged knee-jerk reactions back to a calmer place, where you can learn what’s really going on and respond accordingly. As a business owner, there are seven high-level areas to focus on:
Business continuity strategy - Economists are predicting a sharp recession followed by gradual economic recovery. So now is the time to devise a short-term plan to get you through the next six months. Who are your key customers, suppliers and staff? What efficiency savings can you make now? Do you know your customers’ current needs so you can adjust your marketing?
Cashflow continuity - The UK government has launched several business support initiatives, including Business Interruption Loans of up to £5m for SMEs with no up-front fees. There are variations for asset finance, invoice discounting, and other assistance, and UK eligibility criteria can be found here.
Staff productivity - Factory shutdowns, supply chain disruption, and homeworking are all having a big impact on people’s ability to work. And that makes management much more difficult – not just for you but for your team.
At this time, you can’t overcommunicate. Use all available collaboration tools and ask for ideas and suggestions from employees, involving them in your ongoing plans. In your own communications to staff, avoid micro-managing and negative language. This is particularly important in emails, which can often be misread and misinterpreted.
Visible leadership – The winners from this crisis will be the ones who move from survival mode to plan for the long term quickest. Deal with any emerging blame culture or complacency, then ask your managers or staff to address how you resolve specific problems one at a time.
Marketing plan – Marketing costs are often the first thing to be cut in a downturn, but often at the detriment of long-term customer relationships. As a rule of thumb, consumer businesses tend to spend 5% of turnover on marketing, with B2B at around 2%. Instead of cutting the overall budget, consider exiting unprofitable customer segments, and start targeting competitor customers to make up for any losses to put you in a strong position when this outbreak is over.
Supplier viability – Distressed suppliers can cause enormous damage to ‘downstream’ businesses, but this is relatively simple to address. Build a list of all your suppliers (your invoicing team can help here), then prioritise a handful of key suppliers and get up to date on how they are doing by talking to account managers, tracking financials, and monitoring their news announcements. Consider substituting any weak performers or adding new vendor products to your offer. Finally, keep an eye on exchange rates, and keep up to date with issues that may affect the supplier chain. Be aware, for example, that ports may yet close if there is a border guard shortage.
Operational focus – You may need to adjust your ‘engine room’ to cope with the new normal. Defer non-urgent capital projects, manage customer expectations (eg lead times), and consider what product development to focus on. We can’t all make hand sanitiser, so if your core market is badly affected, can you repurpose your products for another market?
What to do next
Assess your current situation objectively by speaking to your industry body, suppliers, partners and staff, and write down five things you could do differently to stabilise your business.
Speak to those who’ve successfully guided an SME in your sector through a rough patch. Many of our former clients survived or thrived through recessions and major shocks. You can too – and it’s reassuring to speak to someone who doesn’t want to sell you something in return.
Our former clients may be able to help you personally here. Find out how to speak to a BCMS Fellow for impartial advice and guidance.
Right now is an opportunity to reset your business. By focusing on skills, systems and strategy, you will be able to ramp down now and be ready to ramp up when there’s light at the end of the tunnel.