Tough decisions to guide your business beyond the Coronavirus crisis
Many entrepreneurs would agree that the worst thing about the COVID-19 crisis is the uncertainty it has brought with it. It isn’t ever an easy thing to plan your company’s business strategy; but add in a health crisis plus a massive economic downturn, and strategising becomes nearly impossible.
Yet you can’t allow paralysis to set in, because doing nothing during a crisis is almost assuredly a recipe for failure.
The toughest decision of all is the one you have to make about whether to close your business permanently, or to re-open it and persist despite all the challenges.
If you’ve made the decision to carry on, now is the time to plunge ahead and make the other tough decisions that will guide your business past the Coronavirus crisis. Let’s take a look at some of the key questions your leadership team will want to consider asking right now:
Which expenses can be reduced without negatively impacting productivity?
Unless your business functions in a suddenly-booming industry niche such as video conferencing, mask manufacturing or grocery deliveries, you’ve most likely suffered a sudden decline in revenue as a result of the COVID-19 crisis. If that’s the case, it’s time to take a careful look at which expenses could most easily be reduced to offset your reduced cash flow. Here are a few possibilities:
Perhaps, during the crisis, you set people up to work from home. Would it be possible to continue these arrangements and move your main operations to smaller, less expensive facilities?
It’s unwise to cull productive employees unless you absolutely have to. No matter what else happens, you want to retain your best employees. It might not seem so, but retaining employees in a crisis is actually a means of saving money – because replacing employees can cost a company as much as 150% of the redundant employee’s compensation package.
If you haven’t already made use of the resources available to you under the Jobkeeper payment scheme, definitely research that and take advantage of it if your business qualifies.
That said, it might be beneficial to consider initiating redundancies in cases where you made bad hires to start with. If your team includes any chronic under-performers, this is the ideal time to get rid of them.
Vehicle maintenance and fuel
If your business must maintain a fleet of vehicles, could any of them be culled to reduce insurance and maintenance expenses? Could accounting expenses be reduced by using a fuel card that prepares consolidated invoices? Could you find a less expensive source of fuel? The Fuel Card Report website is a free resource you can use for comparing cards and researching which ones might give your business the most competitive benefits.
Negotiate new terms with service providers
Virtually every business in the world is facing a similar set of uncertainties right now. Your suppliers and service providers will no doubt be anxious to retain your business in the aftermath of this economic downturn.
Consider contacting each of them to discuss the possibility of negotiating more favourable terms for your business. If your business is in danger of closing all together, be up front about the situation. Your suppliers will have incentive to give you their best possible terms if they understand they might otherwise lose you as a customer.
What changes must we make to accommodate for recent changes in our customers’ behaviour?
Australians are now doing more of their shopping online and less in person. In some cases, they are opting for do-it-yourself solutions instead of hiring service providers. Overall, they are becoming less extravagant and are being more cautious with spending.
This health crisis is a temporary situation; but it’s important to make assessments about how the resulting consumer behaviours might look when the crisis finally does resolve. Have consumers’ spending habits permanently changed? And what changes will your business need to make in response?
The answers to these questions could help your team to brainstorm some of the changes that could potentially be made to your business model in hopes of staying viable in the long term. For example, if you’re a brick-and-mortar retailer, perhaps it is time to make a more substantial investment in your company’s online presence. It could also be beneficial to examine the possibility of beefing up your local delivery capabilities rather than relying on foot traffic to the store. What other steps could you take to realign your product inventory or roster of services with your current sales trends?
These are a few of the tough questions your leadership team needs to discuss if you’re planning to continue doing business in the current challenging environment. Despite the uncertainties, there are still countless opportunities open to entrepreneurs who are willing to navigate the challenges posed by the virus and the economic downturn.