Why on Earth would I spend money, when I have to cut costs?
Cutting costs to maintain business sustainability and spending money are far from mutually exclusive.
If your cash is vanishing faster out the door in expenses than your sales efforts can pour it back in, then the focus on controlling costs needs to become an obsession. However care needs to be taken with identifying when and which costs to cut. There will be occasions where spending some money may actually make even more sense, if you can possibly afford it. Cutting some costs now may also force you on to a terminal course for your business, unable to make your way back out the other side quickly enough to be competitive and profitable in the long term.
Clearly all businesses need to batten down the hatches quickly whilst this particular virus-based storm front rages towards and over everyone. It is still unclear as to whether there will be a calm after this storm, or whether we are just reaching deep into the Roaring Forties with a cyclone turning into a gale, into a downpour and possibly back up to a gale again.
This is where cool heads need to prevail. Spending time right now on setting your business up for the prevailing conditions, and for the next few months is going to be crucial for weathering this storm. This may also mean you are going to be better off spending some money wisely to make sure you can firstly get through the storm, but more importantly can set off more quickly out the other side.
You can be the best widget maker ever, but that doesn’t necessarily mean you are the best at trying to work out how many widgets are going to be needed, nor what shape they may take in the coming months, nor how people want to buy them, or if indeed they are ever going to want to buy them again! Ideally then the best widget makers should be lining up to consult with the best strategic and business thinkers they can find and afford, to try and help them continue their businesses successfully into the future. They should also be preparing to review every element of their business to see how it is likely to need to change over the coming months.
So with the shameless business plug covered…what should we all be thinking about now?
There seem to be 3 distinct phases to this particular journey into previously uncharted waters. With the standard sailing analogies included.
Survival - get the sails down, make sure everyone is safe, check the life raft is available, and whether the boat really is about to sink. OR Preserve cash at all costs whilst reviewing every element of the business as quickly as possible to stay afloat. Work out how long you can float on current reserves, with the various government plans available, and any likely signs of sales in the coming weeks.
Make the boat safe - get some sails back up as soon as you can, to get underway and start thinking about the nearest safe harbour. OR Get a plan together that gets you through the period of extreme uncertainty of the next 2-6 months. Still likely to be strongly cash focussed on generating sales with minimal costs, potentially also managing inventory down to the last unit to keep the cash flow positive enough to keep going. It also means looking for and assessing any appropriate alternative sources of cash & funding to keep things on course.
Set up to get racing again - check which sails are still in good shape or need replacing, get them ready in the anticipated order of needing them, so as you can get them up quicker than the next guy and get back out in front. OR Get the team focussed back on sales, marketing, operations, product development etc etc, whilst getting your head out of the boat and trying to see over the mountainous waves to the calmer water on the other side; even if that only confirms that the water isn’t about to get that much calmer in a hurry, and prepare your team for the exciting part of the journey back to whatever normal ends up looking like for the next few years.
Those who get through these phases the quickest will be the winners long into the future. The best way to navigate quickly and safely through this time is by having a plan that allows you to see where you want to be at the end of this storm, so the sooner you start working on that plan the better. It is not too late to start working hard on this now, but once others are back up and running, it may be very hard to catch them.
Whilst this is all easy to say, the details of getting through them are complex and uncertain, will require hours of planning and an ability to be supremely flexible. It may also need a little bit of investment in dollars as well as time to make sure your business remains On-Course during and long after these storms.
