- March 23, 2020
- Posted by: Steve Wood
- Categories: Established business, News, SME
“Hope is Not a Strategy” What is your response to COVID-19?
COVID-19 is not a strategic problem. It’s a survival problem, in which all the rules have changed.
It’s a Black Swan event. No-one expected it. But in truth it was expectable.
Look at the number of disease scares over the years. Look back at the GFC.
That was an example of financial contagion caused by banks not wanting to buy contaminated mortgage backed securities.
Businesses are facing an adapt-or-perish event.
Those that are still around at the end will have been more ready than those others that did not prepare or act quickly enough.
This is a Darwinian event, from which the fittest and most adaptable will survive.
This is how the ABC explains the very rapid growth in case numbers.
The contagion pattern might follow this trend.
Firstly, there will be a reduction in business activity.
Fewer aeroplane trips, fewer travellers, fewer visitors, fewer restaurant meals, fewer of everything, apart from cleaning and sanitising products which are being produced on overtime; and food which is plentiful, but which is being hoarded by some less considerate and community minded individuals.
For the toilet roll, sanitiser and food companies, there are not enough hours in the days.
Seven days’ worth of food was sold in one day recently. Butchers and shelf stackers can’t keep up. It’s madness on steroids.
For other companies, sales will fall dramatically.
Travel and recreation companies will miss out. Support service companies, product suppliers and contract workers will be negatively affected.
Sales will fall below break-even levels. The real problem is that no one is buying.
The businesses who go broke are unable to adapt and fix their fixed cost structure fast enough.
The company balance sheet is not strong enough and so the business runs out of cash and implodes.
Whatever long-term strategy we have is effectively irrelevant if no one is buying.
We are effectively in a last man standing situation.
How prepared are you for a last man standing situation?
Many companies will fail well before that happens.
And it will depend on your preparation done to date, your company’s financial strength, as well as the mental strength of the leaders. Those that choose to give up will lose before those that decide to find a way forward.
Some short term actions
There are some things which can be done in the short term.
1. Find ways of working that do not need face to face interaction.
2. Help your staff to stay safe.
3. Reduce your own costs.
4. Talk to your customers.
5. Mange your cash flow expectations.
6. Manage and protect your sources of finance.
8. Communicate often. Don’t be scared of repeating the messages so that everyone in the team is clear about what to expect from others and what is expected of them.
9. Prepare your lockdown plan. How will you run the business during the lock down period?
Some longer term strategic marketing actions
For the longer term, here are some ideas.
1. Find ways of keeping sane, so you are still in the game when it restarts.
2. Find ways of being helpful to your customers. Some will be able to pay you, some not. You choose which.
3. Find ways of improving customer communications. Obvious methods are online, direct email and social media.
4. Find ways of adding value. What services and products would be of use and be seen to be of value?
5. Find ways of being creative. Consider adapting your business strategy around those customer groups which need the help, who are over-stretched, stressed out and would be grateful for the help.
6. Finally, this requires that you stay positive. Nobody likes negativity. Find ways of staying mentally strong.
It is all a bit miserable talking about downside, lockdowns or closing the business for while I know, but here is a question for you?
Is it better to have thoughts about the challenges ahead of time and have a plan for them, rather than ignoring the situation for what it is and wishing it was not happening?
Hope is not a strategy.
Talk to people around you. Lean on them for mental and moral support.
Get help from professionals who you trust.
There is no need to do this alone.
We at Roaring Success have a wide range of skills and have worked with clients in a wide range of industries. https://roaringsuccess.com.au/about-us/
For a free, confidential chat, please call Steve Wood on 0424 325 763.
If I am not available, leave a message and I will call you back.