With a potential decrease in revenue, how do you protect your business’s financial integrity? Your cash flow is the lifeblood of your business.\u202f From payroll to overhead, how do you safeguard your business during a crisis-based interruption to revenue?<\/p>\n
John <\/span>F. <\/span>Kennedy once <\/span>shared with<\/span> the nation<\/span> that the <\/span>Chinese <\/span>written word for crises is<\/span> comprised of<\/span> two characters<\/span>:<\/span> one representing dange<\/span>r, <\/span>the other opportunity<\/span>.<\/span> The c<\/span>hallenges caused by the COVID-19 outbreak may not feel opportunisti<\/span>c. Effective leadership during a crisis<\/span>, however,<\/span> reinforces <\/span>trust and confidence<\/span> in <\/span>all <\/span>of <\/span>your <\/span>business relations<\/span>\u2014<\/span>from employees to customers and creditors.\u00a0<\/span>\u00a0<\/span><\/p>\n The way <\/span>you react during a cris<\/span>i<\/span>s lays the foundation<\/span> for effective recovery <\/span>after<\/span> i<\/span>t\u2019s over<\/span>.<\/span> In fact, it can even present opportunities for growth\u2014b<\/span>ut only if <\/span>your<\/span> business survives the catastrophe.<\/span> That means sustaining operation with reduced or totally interrupted cashflow.\u00a0<\/span>\u00a0<\/span><\/p>\n The <\/span>ideas and <\/span>princi<\/span>ples<\/span> that follow can help your business survive<\/span> a cash-starved economy. <\/span><\/p>\n Take time to thoughtfully asses your <\/span>unique <\/span>situation. This sounds <\/span>obvious but<\/span> is often overlooked during emergencies. <\/span>Our instinct <\/span>is to act<\/span> when crashing<\/span> markets<\/span> siphon precious liquidity <\/span>out of our assets and<\/span> orders are being postponed<\/span> or <\/span>canceled<\/span>.<\/span> Plot out your worst-case scenario and <\/span>triage<\/span> accordingly.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n What can<\/span> you do to help your customers <\/span>weather<\/span> their situation<\/span>?<\/span> What untapped market base may be experiencing <\/span>similar challenges<\/span>? <\/span>The 2001 startup airline <\/span>Airtran<\/span> grew during the recession following 9\/11<\/span>. They<\/span> acquir<\/span>ed<\/span> discounted asset<\/span>s<\/span> and served<\/span> the market<\/span> segment<\/span> that <\/span>bigger<\/span> airlines couldn\u2019t <\/span>because of<\/span> larger <\/span>losses.<\/span>\u00a0<\/span><\/p>\n Set expectations for your staff. Don\u2019t alarm them. Panic is infectious. Do be honest and direct about the challenges you<\/span> will <\/span>all face together. In many ways<\/span>,<\/span> your people are your business. You will all need the same balance of optimism, urgency, and resolve when facing the ever-changing daily trials.\u00a0 <\/span>Learn more about leading staff through uncertainty here. <\/span>\u00a0<\/span><\/p>\n Reduce or eliminate cash outflows. Stop all discretionary spending. Negotiate with utility providers, suppliers<\/span>, <\/span>and vendors. <\/span>Cut <\/span>all expenses<\/span> that are<\/span> not essential <\/span>to<\/span> your <\/span>business<\/span>. Reduce your hours of operation. Reduce or forego your own salary for as long as possible. Tighten extended credit while discounting advance or transactional payments as deeply as possible. <\/span>Consider invoice discounting. A third party pays <\/span>you <\/span>upfront for your customer invoices, less <\/span>a <\/span>commission<\/span>,<\/span> and collects the money from your customers. <\/span>Cash<\/span>flow is the objective now <\/span>and is more important than <\/span>margin<\/span>s<\/span>.<\/span> No cash, no profit.\u00a0<\/span>\u00a0<\/span><\/p>\n Brainstorm solutions for <\/span>offsetting <\/span>your<\/span> most pressing liabilities<\/span>.<\/span> When was the last time you refinanced your debt? <\/span>What is your current aggregate interest rate for all loans? Can it be consolidated or reduced? <\/span>Thoroughly review <\/span>all contractual agreements<\/span> and insurance contracts <\/span>for<\/span> contingencies like<\/span> disaster clauses<\/span> or business interruption coverage<\/span>.<\/span> Research and stay abreast of local and federal government relief efforts like low-interest loans and aid.<\/span> Can you <\/span>offset liabilities with real assets?<\/span> Divesting<\/span> stagnate inventory<\/span> and recently canceled orders <\/span>generates<\/span> desperately <\/span>nee<\/span>ded<\/span> cash flow<\/span>,<\/span> even if at a cost or moderate loss basis.<\/span> Negotiate timelines for payables and not just for interest-free extensions. Request early payment discounts. <\/span>\u00a0<\/span><\/p>\n Catastrophe doesn\u2019t favor<\/span> the idle.<\/span> The <\/span>actions you\u2019ve taken <\/span>shouldn\u2019t be treated as transient<\/span> or contingencies<\/span>. They are the new norm<\/span>\u2014or at least they are<\/span> for the time being.<\/span> No one has any way of knowing when the economic winds will change, including you.\u00a0<\/span>\u00a0<\/span>\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n I<\/span>n addition to your existing marketing<\/span> and media <\/span>plan, <\/span>incorporate <\/span>a<\/span> more personal and direct contact approach<\/span>,<\/span> like teleconferencing or personal email. Check on the people you do business with at all levels and support them. Ask if they\u2019re <\/span>okay<\/span>. Share the sense that you\u2019re all in this together<\/span>, <\/span>because you are. <\/span>When it\u2019s all over, t<\/span>hey won\u2019t forget<\/span> your personal touch during such a stressful and challenging time<\/span>. <\/span>That retains value regardless of the outcome of your situation.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n Maintaining a business <\/span>without<\/span> cash flow for any period is a monumental task<\/span> so ensure you are employing good <\/span>self-care<\/span> so you are in a good position to captain the ship through stormy seas<\/span>. And keep in mind the <\/span>adage<\/span>, <\/span>\u201c<\/span>This too <\/span>will<\/span> pass.<\/span>\u201d<\/span>Think before you act<\/span><\/b>\u00a0<\/span><\/h4>\n
Problem solve holistically <\/span><\/b>\u00a0<\/span><\/h4>\n
Communicate internally <\/span><\/b>\u00a0<\/span><\/h4>\n
Act now, a<\/span><\/b>ct <\/span><\/b>decisively <\/span><\/b>\u00a0<\/span><\/h4>\n
Get creative<\/span><\/b>\u00a0<\/span><\/h4>\n
Maintain control <\/span><\/b>\u00a0<\/span><\/h4>\n
Be proactive in all your relationships<\/span><\/b>\u00a0<\/span><\/b>\u00a0<\/span><\/h4>\n
Be kind to yourself and others <\/span><\/b>\u00a0<\/span><\/h4>\n