Business Survival Plan for COVID-19
Tech Entrepreneur, Web Guru & Investor #science #technology #innovation #telecom #internet #gadgets #lifesciences
Less money? No hope? Don’t give up! Your business can survive!
Even if you have almost run out of money and are completely without hope, your business can almost certainly survive the COVID-19 crisis. Furthermore, you can emerge with a business that is stronger than the business you had before the crisis.
Most successful entrepreneurs have started small, woefully undercapitalized businesses and successfully navigated them through one crisis after the next. The most common and painful crisis is running out of cash. At times not only did they have no cash on hand, but they projected massive cash shortfalls in the months ahead. At other times their bank showed them the door and no other bank would lend them money either.
They’ve survived running out of money and so can you.
All too often it seemed like their business was finished. They were totally out of money and hopelessly in debt. And the future looked even worse. It seemed like there was no way out.
But time after time, they put together a plan and found a way to survive. For example, someone I know started a book publishing business in his basement apartment with just $1500 and took it through one crisis after the next, eventually growing and selling it for $40 million.
No matter how bleak things seem now, your business can survive. And you can create an even stronger business model at the same time. Here’s how to do it.
First, calm it down.
When the bleakest moment hits, you have to calm yourself down. For me, I’d first go for a walk. Then I’d remind myself that while running out of money was bad, it wasn’t as bad as let’s say getting hit by a truck. But sometimes I felt so shocked by quantum bad news – such as finding out that we would be out of cash reserves in 30 days with 2 years cycle left for new generation of products to come in the market, while keep a global operation on keel – that I would have to digest the news for a day before being able to work on a solution. Sometimes you can’t just dive into it.
You might be thinking how can I get calm when the crisis is threatening to end my business and throw my life into upheaval? You can’t expect to get totally calm. But you can get calm enough to start working on a new plan for your business.
Second, understand the key positive difference for you in this COVID-19 crisis.
Listen. This COVID-19 crisis really is different than any other. Everyone on the entire planet knows about it! And everyone is being impacted by it! Usually, your business problem is YOUR business problem. But this business problem is the WORLD’S business problem.
Because it’s a global problem everyone understands what your problem is.
This crisis gives you a carte blanche to prfioritize your bills! It gives you a carte blanche for creditors to understand why you are not paying your bills.
This crisis in your business did not happen because you made a business mistake. This crisis did not happen because you were not prepared for a recession. This crisis happened because of a global pandemic that led governments forcing businesses all over to shut down and consumers to stay at home. It’s not your fault.
You can’t be expected to pay your bills normally when the government is shutting down both businesses and consumers.
People don’t expect you to run your business and pay your bills the way you usually do.
To be honest, from a legal perspective, you are taking on risk if you don’t pay your bills. During this crisis, there is nothing dishonorable or unethical about seeking deferment of payments where possible. It is possible that creditors could deny you full payment deferment but they also understand your position, as it is everyone’s position. Make arrangements with them to pay what you can, and what they can accept. Understand that in crisis Large companies tend to postpone payments to vendors to save cash as economic problems grow. In current situation no one wants legal action and actually, the legal action is not going to begin quickly, especially at this time.
But you do need a survival plan.
If you have some key employees you may decide to completely involve them in all steps of creating your survival plan. For me, during a total crisis, I tend to do most of the work in creating a survival plan on my own. Speed and making difficult wide-sweeping decisions quickly matters. I do whatever I have to do to find quiet time to get going on a plan. And I typically work on it deep into the night.
Then once I have a basic plan, I’ll go and present it to key employees, get their feedback and modify the plan. Rushed as I might feel to get a survival plan into action, I would try to listen patiently to feedback from key managers. My plan may change significantly after getting their feedback. And even if my plan doesn’t change much, it is important that the key employees felt that they had a “voice” and their opinions were “heard.”
If you have a really talented and highly involved team of employees you may instead decide to involve them completely during this process of creating a survival plan. This, of course, can get messy if even part of the discussion gets into even temporarily eliminating their positions. So think out this approach before you embark on it.
Forget how you ran the business yesterday. Today is a whole new ball game.
Whether you create a survival plan by yourself or with your team, there is a basic mindset that I recommend: “zero-based planning.” In other words, the past is past. Forget it. It’s not going to work now. Start with no assumptions. Start with a blank sheet of paper.
In other words, you are not going to think about maybe trimming the hours you are open or reducing your marketing costs or trimming your overhead.
Instead, you are going to redesign your business totally. And you are going to design it to survive during this tough time.
Don’t trim a little bit each week…make all your changes at once.
You don’t want to be in a situation where you slowly decide to trim a little this week and hope that this crisis will end really quickly. It’s not going to happen. This crisis is not going to end overnight. COVID-19 isn’t going to disappear instantly. And even when the worst of it ends, the economy is not going to bounce back like a rubber ball! That’s a fantasy! It’s going to take time to get back to a high spending, normal economy. So you don’t want to be in a situation where you cut a little this week. And then you go into crisis again next week and you cut a little more. And so on and so forth!
Instead, you want to redesign your business on a survivable basis right now. It will likely involve some painful decisions. Maybe you won’t be able to serve customers who can’t pay in advance. Maybe you will need to abandon a slow-moving product line. Maybe you will have to reduce your staff.
My experience has been that it is much better to do a complete redesign of your business as soon as possible, rather than make one incremental cut after the next. Later as you find your business is gaining strength you can consider adding back aspects of your business that you are cutting now.
Your Business Survival Plan During COVID-19
A short one-page description of the temporary design of the business for the crisis period, with an emphasis on ensuring survival of the business.
- Cash Outflow Prioritization
A ranked list of which outflows are important as cashflow is available.
- New Budget
A new monthly budget for the crisis period.
- Projected Income Statements
Projected profit and loss statements for each month of the crisis period.
- Projected Balance Sheets
Projected balance sheets for each month of the crisis period.
- Projected Cash Flow
Projected cash flow for each month of the crisis period.
Working with your employees
Once you have your Survival Plan put together and discussed it with your key employees, it’s time to discuss the situation with the rest of your employees, if you have any.
First, you want to separately meet with any employees that you are dismissing, temporarily laying off, or reducing hours for. You want to meet with them in-person, one-to-one if possible. Then explain in a nice way your difficult situation and what it will mean for them. If you are dismissing them, then hopefully you will be able to offer some kind of severance pay or extend benefits for at least a short period of time. While you and or your key people may be very busy and distracted it is important to take time and energy to deliver this difficult news to employees as carefully as possible. For one, how you deliver the news will impact other employees who are not being dismissed. And for another, it’s just the right thing to do.
Re-assure your employees with an in-person meeting.
Then you want to pull together your remaining employees in an in-person group meeting. You want to assure them that you now have a carefully developed survival plan for your business during this difficult time of COVID-19. You especially want to assure them that you believe you will not have to make any future job cuts and that you believe that their continued employment at your firm should be safe.
Then you can outline any changes that your company is making. I would also recommend asking for everyone’s help in either increasing revenue or decreasing costs or both. I would even consider offering cash prizes for cost-cutting suggestions. And finally, I would field any questions that people might have. Additionally, I would offer to be available to discuss anything about these changes or the impact of COVID-19 on them or the workplace on a one-to-one basis.
Communicate with your customers.
You have to put yourself in your customers’ shoes and think about how they view your business now. Communicate with them how your business has changed. Communicate with them how you will handle things differently now. If you have any in-person contact with them or with products being delivered to them, emphasize steps you have to ensure their safety.
A Great Chance to Radically Improve Your Business Model
So how does my company emerge better from the crisis?
A big crisis opens the doors for big changes and improvements.
The answer is that a crisis can open your mind and the mind of your employees to consider totally re-doing and improving your business model.
As Winston Churchill said, “Never let a good crisis go to waste.”
A good crisis is an awesome time to rethink some of the basic concepts and assumptions about your business. A crisis opens your mind to doing things in new ways and frankly just opening up one’s mind to new possibilities is one of the biggest stumbling blocks to radically improving the performance of a business.
Hence a crisis is a great time to re-examine your core business strategy.
In particular, I believe that the vast majority of businesses could radically improve their business performance if they just improved these three things.
The Three Big Things I Suggest You Take a Hard Look At
Just re-examining three things can send your business performance through the roof!
Three key things almost any business can do better:
- #1 Clearly target identifiable markets
- #2 Sharply differentiate products and services
- #3 Communicate your value proposition in a “Unique Selling Proposition”
Doing each of these three things exceptionally well is extremely important for a well-run business.
Very very few businesses really do these things really well!
So why don’t businesses do these three things well? The problem is that most businesses think that they do. And maybe your business is the exception. Maybe you do all of these three things great.
But I’ll share a secret with you. I have run global businesses, turned around companies in distress, successfully started over a dozen businesses and created lot opportunity for my employees, customers and stakeholders. But here’s my secret…I have not always done these three things well. And in hindsight, if I had, I would have been even more successful.
Not doing these three things well is the #1 reason that businesses underperform. It’s the #1 reason that so many businesses suffer from low-profit margins, slow growth, and weak financial performance. And it’s likely the #1 reason small businesses fail.
Let’s take a quick look at these crucial three factors for business success:
#1 Clearly target identifiable markets
First, you need to have one or more clearly identifiable target markets. You want to design your business to do an excellent job of serving these markets. Try to harness internet to the maximum in reaching these markets. The current crisis has proven the inviolability of having an online presence for a business. Humanity to keep going even as most countries shut down, as internet enabled that.
#2 Sharply differentiate products and services
Second, your business needs to be “differentiated.” You are unique and your products and services need to be unique to. They need to offer something special that your competitors do not. Something that really matters to your customers.
#3 Communicate your value proposition in a “Unique Selling Proposition”
Third, you need a powerful unique selling proposition. A phrase or sentence that neatly explains why a customer should do business with you and not your competitor? Again harness technology and digital marketplace to enhance that USP!
Excelling in these three dimensions alone can create a very successful business model. And there is no time better than a massive crisis to re-evaluate your whole business concept and make sure that it is strong as it can possibly be.
It might seem grim now, but your business can survive!
So no matter how grim the situation seems for your business now, get a powerful Survival Plan in place that will ensure that your business not only thrives but is stronger than ever before.