Entrepreneurs know that the success of their business rests upon their ability to recruit, inspire and innovate to grow their company. However, crisis situations demand hands-on leadership that takes business owners back to basics, which has enabled some businesses to remain profitable through the Coronavirus pandemic.
While it was tempting for some business owners to just pull the shutters down on things during the crisis, we have spent the past few months helping them fan the flames and focus on what comes next.
Trimming the fat
Before lockdown, many owner-managers were starting to delegate more, let go and operate in a new way. However, after many made the decision to furlough workers through the Government’s Job Retention Scheme, it was suddenly apparent that businesses had become a bit flabby and were not the lean, mean fighting machines they once were. This led to a wave of redundancies being announced as business leaders downsized, took back control and started to re-evaluate how they could perform better.
Focus on profitability
There’s a saying: turnover for vanity, profit for sanity and cash is reality. Businesses often talk about having a cash flow problem, when in reality what they have is a profit problem. We worked with an engineering business with a £15m turnover that saw its rate half during May/June. The owner made the decision to furlough their sales and support staff and focus solely on profitability of the business. They started to ask themselves what it was they did well and look at where the profit was coming from. By doing this, they were able to flex, adapt, remain agile and ultimately profitable in the process.
Taking back control
Sometimes a crisis forces us to make decisions that we should have made any way. We all know that running a business involves risk, but if part of your business is failing, it’s important not to let it kill the rest of your company. You need to take stock before you put more money in, remortgage your home or take out additional loans, you need to know that there is a reasonable path to survival.
The bounce-back from this pandemic is going to take a long time and while a rapid V-shaped recovery outcome is still possible, there are risks. If we do get another wave of the virus and have to do more widespread lockdowns, that’s going to knock the economy off that path. Nobody wins if business fails, so it’s time to plan ahead now and seek the advice of the people you trust in your solution.
Adapt to your situation
We worked with a manufacturing business that pivoted to help equip the NHS during lockdown with privacy curtains for hospital beds. As more Nightingale hospitals were announced, the business found itself inundated with orders. However, the challenge was in the supply chain. The manufacturer’s supplier had furloughed its staff and had closed. It took a phone call to get them to reopen on a limited basis to help with demand. During lockdown we also saw our clients in the home improvement sector doing really well as more people focused on their homes. Another Live Events company we work with initially saw a big threat to their survival, but they turned to digital work to keep going. Moving them online has ultimately helped them to become more visible.
Keep calm and carry on
You need to seek the advice of people you trust and identify the challenges you’re facing when the going gets tough. You need to know what it is that is making your business tick, so it’s important to step back and look at the bigger picture. Pay attention to everything. You’ll need to simplify your goal if you had a quarterly plan and you might even need to evaluate things weekly going forward. It’s also important to continue to embrace technology and streamline your systems. It’s important to pay attention to your financials too because you need to know how long your business can remain viable. Cloud Accounting for example will give you access to real-time information to help you make the right decisions faster.
Think about what the disruption has meant to your supply chain these past few months. What have been the difficulties you have faced with communicating with customers? How you are going to attract new ones when everything settles back down? Once you have a list of challenges, you’ll be able to plan solutions with a number of different scenarios in mind.