Unless you are reading this blog from the Marshall Islands, Samoa, or about 10 other remote archipelagos, you likely have been impacted by the COVID-19 pandemic.
And my guess is you’re sick of reading introductions like, “In light of these trying times,” or “We’re all in this together.” Chances are as a company owner/CEO, you feel quite like you’re in this all by yourself. After all—it’s lonely at the top. So, a few practical tips to move your business through the hiccups and return to healthy growth might be helpful.
In the next five to seven minutes, I hope to help jumpstart your current and post-COVID playbook. One prerequisite: Take a look at my previous blog about dealing with changes in the economy - in particular, the section that helps you assess what phase of growth your company finds itself in as you prepare to “reopen.”
Those phases are as follows:
Source: ITR ECONOMICS
Remember, these phases are INTERNAL to your business. It may sound counterintuitive, but the state of the economy does not define the internal growth phase of your company. With this understanding, let’s take a look at some specific moves you can take right now to manage your way through the current uncertainty.
Suppliers: Now’s the time to lock in commodity prices, and to renegotiate and finalize your raw material contracts before prices begin to escalate. Be sure to include new and alternative vendors in the mix — likely they are hungry and will be ready to cut a deal.
Human Resources: Though it may seem odd, adding “Grade A”-type sales professionals is a must-do right now! During economic slumps, the available talent pool tends to be ripe with quality hires. Also, make sure you are implementing training programs to ensure you have prepared your team to face the coming growth surge that typically follows Phase A.
Sales and Marketing: Double-down on customer market research and tap the insights of your vendors for present-day market intelligence. Make sure you are building go-to-market strategies along with advertising and marketing programs that exploit your competitive advantages and tout your strengths.
Operations and Production: Get lean and mean through technologies and software that will improve your ability to scale quickly. Ensure your distribution chain can handle increased activity. And, most importantly, phase out low-margin work in favor of more robust business that will strengthen your bottom line!
Human Resources: Accelerate your training programs and identify opportunities to quickly outsource or subcontract part of your production overload to combat pressures caused by tightening of internal resources.
Sales and Marketing: Do not be afraid to increase your price point. Though activity may level off at first, profitability will increase. Also, undertake efforts to enter new markets — either by geography or new industries — but avoid offering brand new products and services in these new geographies/markets.
Manufacturing and Distribution Logistics: Keep a keen eye on process flow for bottlenecks — react to problems before they slow production. Continue to build and manage your inventory, and consider additional distribution centers nearer your best customers, so you can reach them faster than your competition.
Out of the Box Thinking: If you have the capacity, take on subcontracting work for other companies. Want to strike while the iron is hot? You might also consider selling the business if conditions are right, and ripe. In Phase B your business is growing—this is the best time to get top dollar if you decide to sell!
Note: Once the early period of Phase B is over freeze any expansion plans. Phase C often follows Phase B, and you don’t want to be exposed when slowing growth hits.
Suppliers: Keep a close eye on accounts receivable and evaluate vendors for strengths (and weaknesses). Ask them the hard questions!
Human Resources: Early in this mode, let natural attrition reduce staff, but don’t hesitate to begin strategic workforce reductions if necessary. Also, pare back training — unless a lack of employee preparedness threatens to put you at a competitive disadvantage.
Sales and Marketing: Judiciously manage your overall advertising budget, placing marketing resources against the most important targets. Deemphasize commodity-priced products and services in favor of more superior products and services.
Operations: Decrease your on-hand inventory, while maintaining enough stock to meet current customer demand. Remember, cash is king right now —so work as hard as you can to winnow down your aged accounts receivables. Don’t allow quality issues or problems like slow delivery to fester, or you risk losing ground to competitive interests.
Human Resources: Continue to reduce headcount to bring expenses into check; eliminate overtime and reduce overhead. You might also consider combining departments with like capabilities and reduce management headcount.
Sales and Marketing: Be selective in your paid media choices, while focusing on customer/company wins to help tell the story of your positive attributes. Your competition will bail out on marketing and maybe cut sales expenses as well—don’t jump on that bandwagon!
Though temporary price reductions may be necessary to capture new accounts or expand your offerings, tighten, rather than ease, credit policies and keep a close eye on customer receivables. Your salespeople won’t like this. Do it anyway.
Out of the Box Thinking: Increase requirements for capital expenditures, but purchase the most critical equipment to ensure success during a return to Phase A and B. Also, review all lease agreements and don’t be afraid to negotiate relief, or some space improvements, to help alleviate your immediate challenges.
If you are in the latter portion of Phase D, and recognize your recession is dissipating, consider these three beneficial strategies:
That’s a lot to chew on, and the key to surviving and thriving resides first in your ability to determine the internal growth phase of your business. If you need help in determining your company’s economic phase or mode of growth and want to act quickly, a fractional growth executive — like yours truly — can be a wise investment with both short and long-term benefits. Please let me know if I can be of assistance, and best of luck in moving your business forward.