The pandemic has put businesses in flux. Not only are they dealing with unprecedented disruption in the market and within their business, the uncertain outlook has made forecasting, even only a couple quarters out, difficult, if not impossible.
Fortunately, companies are coming out of a very strong economy and have strong balance sheets. That’s provided some insulation as they quickly learn to do business differently — for instance, transitioning employees to remote work. But with the state-enforced business closures and hesitancy by many to spend, revenues have taken a hit, which has created cash flow issues.
Even as Ohio starts to open back up, there’s still a lot of timidity brought on by concern for health and safety. People can go back to work but are required to follow guidelines, such as wearing a mask and maintaining a certain distance from coworkers and more. That’s made many employees understandably nervous and that’s affecting business.
Smart Business spoke with Sam Agresti, director of Brady Ware & Company, about some of the ways businesses can regain their footing and chart a path forward.
How do businesses start to get themselves on the road to recovery?
Companies should continue to right-size their business and focus on cash flows — managing liquidity was a key to business success during the Great Recession, and that will be key now. Then they need to continue to adapt to the necessity of doing business differently, especially considering there could be a second wave of COVID-19 infections that could force another round of restrictions on social gatherings that once again limit how business is conducted. Businesses need to quickly adapt to the lessons that have been learned over these last couple months about the new environment, with particular focus on managing expenses and finding creative ways to ramp revenues back up again.
Also, while culture may not seem like something businesses should focus on right now, it’s a critically important aspect of doing business during a time of high stress. As people come back to their offices, cracks in the culture can be exacerbated. If the culture is not managed, those fissures can cause further disruption, so it’s important to spend some time on maintaining and keeping the culture strong.
What should planning look like in this environment of uncertainty?
Businesses should have a very short-term focus and plan only for the next one to three months. Anything more than that and it may be wasted time as there’s too much disruption and uncertainty because it’s not at all clear what the fall will look like. Within a month to three months, companies can identify their focus and still be able to pivot if necessary. Staying flexible will be key as so much continues to change practically every day.
Who can help businesses as they begin to open back up?
Companies should reach out to their outside advisers and internal boards for advice. Many of these folks are working with lot of different businesses and have experienced a lot of different situations. They can offer insight as to how other businesses have dealt with these challenge. Businesses should also keep in touch with their banker to maintain that relationship, keeping them abreast of their situation and generally just stay out in front of financial issues as best they can.
It’s prudent for companies to talk monthly with their board and adviser group, more frequently — weekly or bi-weekly — if the business is in a dire situation. During March and April, it wasn’t uncommon for some businesses to maintain a standing weekly phone call with their advisers to discuss cash flows, forecasting and other pressing business matters.
CEOs can’t and shouldn’t try to manage this crisis alone. Get as broad a perspective on the situation as possible and be willing to try any feasible solution that will help the company stay relevant as customer needs, and the market itself, change.
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