The Three Questions Every Business Owner Needs to Answer Right Now
Photo by Jason Wong on Unsplash
There is a lot of panic out in the world right now and rightly so. It’s a new world. It’s a strange and uncomfortable world. It’s a world that no business owners could have prepared for but all of us wish we had.
Now that this world is upon us it’s time to jump to action and begin planning for the next 12 months of your businesses and lives. Whether you want to admit it or not it’s a bad time to be a small business in almost every industry or vertical. People are holding on to their cash and waiting to see what happens in the world.
One thing is for certain, we will emerge from the COVID-19 pandemic. To make it through to the other side, I believe that businesses of all sizes need to be thinking solely on the following three things:
How deep is the damage to your business?
How long will the bleeding last?
What does the recovery curve look like?
This seems simpler than it is for most businesses.
Let’s work through these three questions slowly and clearly.
How Deep is the Damage To Your Business?
Is your business or business model dead?
Have you lost 30%, 60% or 90% of your revenue and customers?
Can you operate at all for the next 6 weeks, 3 months, 6 months?
Will your staff stay if you pay them half salaries for a few months?
Can you start again in 2 months if your staff don’t stay with you?
Will your debtors give you a break on what you owe them and if so, for how long?
Will your landlords give you a break on your rent for a while?
Right now, every business owner and entrepreneur should be doing triage on their businesses. If you’re not, it’s time to get serious and get started. Even if your business is booming in this crisis you should still be thinking about what the world and your business will look like over the next 12 months.
The above questions are just the high-level, light touch questions to get you thinking. What you really need to be doing right now is assessing every expense, every income source, every employee, their skillsets and making copious notes on each item to allow you to make informed decisions in the coming two phases of your planning.
This is how you assess the damage and begin to retool your business for the new world. It’s unlikely that you can expect your team to continue to do the same jobs for the next few weeks or months. If they’re great people then you need to start to find them new things to do in your new business.
Once you have the information you need you can then start to think about how long the bleeding will last. But if you can’t find the wounds then you can’t stop the bleeding so dig deep and map it all out. Every inch of your business needs to be carefully analysed. Leave no stone unturned and no spreadsheet empty.
How Long Will the Bleeding Last?
This point in the process requires you to step back and take a macro view of your business and the world.
Is your industry under fire or is it going to kick back into action as soon as the lockdown ends and COVID-19 is under control? Is it going to kick back in immediately or over a period of weeks, months or years? Be honest and ask colleagues or even competitors for their views.
If the bleeding is going to last longer than your cash on hand can maintain then you have a serious problem and some tough decisions to make urgently.
I don’t think that the lockdown is going to be over in a matter of weeks, we’re looking at many months (if not many years) before anything begins to approach normalcy again on a global scale. India has put 1.3bn people on lockdown. No country recovers from this level of action in weeks.
It’s imperative that you form realistic scenarios that you can plan for. Hope for the best, plan for the worst. The next step requires you to start laying out the different scenarios you’re facing.
What Does the Recovery Curve Look Like?
If you think that your business is going to start back up at 100% when the lockdown ends then you are sorely mistaken.
Your business is under siege, the global economy is under pressure like our generation has never seen and it’s going to take time to rebuild.
The Recovery Curve is a way for you to estimate how dramatically your business can recover in the months after economies open back up. Is it a sharp curve from 20% back up to 100% in a matter of days? If so, you’re lucky. Unfortunately, it’s more likely a slow curve fraught with sharp rises and steep cliffs over a two year period. Yes, I’m serious, the global pandemic has more than likely taken your business back two years. Get your mind around this and start planning on ways to change the curve or patiently brace for the long Winter ahead.
Be honest and think about when the lockdown ends, can your business can operate at full speed immediately? What do you think your revenue will be in month one post-COVID? 50% of normal? 40%? 20%?
Plan out three scenarios; The best, the likely and the worst scenarios.
The Best Scenario
If you look at the world with optimistic eyes and all of your plans and preparations work out perfectly, what does your revenue look like in 6 months? Will you be up to 60% of where you were pre-COVID? Then, two months post-COVID are you up another 10% to 70%?
Now that you’re at 70% of your pre-COVID revenue, what does your team look like and how do you plan to bring them back on board? Will they come back? Will they feel safe and trust you?
The Likely Scenario
You have made plans, you are cautiously optimistic but you are still planning for difficult times and very slow growth back to normalcy. You’ll likely have to lay off half of your staff and cut the size of your business by at least half over the next short while. Your suppliers will suffer but you’ll survive and grow new revenue streams once you have made it through the worst times.
Do not be overly optimistic with the likely scenario. Try to pull in people who know your business and industry for some perspective here.
The Worst Scenario
This is the easiest scenario to conceptualise because humans can easily rush to the worst case. The worst-case scenario looks something like this:
The COVID-19 pandemic takes at least 12 months for humanity to contain. In this time your business is unable to operate, the world is in and out of lockdown constantly and your team struggles to make ends meet. The government subsidies are slow to move and only delay the inevitable.
How do you begin to retool your business and your team today? What do you do change the perspective of the world about your business? What will it take to either shut it all down or pivot what you have? Which is more intense, brutal and harsh on you and your team?
This might be the easiest scenario to imagine but is definitely the most intensely difficult to execute on. Lives will be impacted across the board. Suppliers will shut down, staff will lose their homes and you will lose sleep, hair, money and time that you will never get back. It’s tough out there but it could just be your Phoenix moment.
One of the ten Nicisms that I live by is: Sometimes you have to burn it all down and start again.
Once you have your scenario planning complete you need to communicate these scenarios to your team, your customers and your suppliers. Let them know what you are thinking and how you are planning.
By involving your team you give them a sense of ownership over the outcome and you help them plan their own lives accordingly. Bringing your suppliers in shows them a level of respect and trust that most businesses don’t offer in times of distress. They’ll thank you and if they don’t, keep in mind that they are fighting for their own survival, so give them a break.
Nothing about this is meant to be fun. Nothing about this is going to be easy. However, this is the new world that we find ourselves in and unfortunately there is a lot of waiting that needs to be done. There are decisions that will be made in the next three weeks that you have no control over and will directly impact your next move.
Plan out your scenarios and have your next moves mapped and ready for the next big shift in the landscape. Trust me, there is a lot of change afoot and this is the new normal.
