To Our Valued Clients and Friends:
Welcome to the ninth and final installment in our series on preparing your business to weather unexpected events. Read Parts I – VIII here, here, here, here, here, here, here, and here. This week, we discuss 10 mistakes businesses should avoid during a crisis.
Crises do happen – we all know that, and if we didn’t before March of 2020, we’ve learned it since. And, of course, none of us was nor could have been fully prepared for a global pandemic, nor for the attendant scrambling by our government agencies – at all levels – to address it effectively.
Even businesses with good risk-preparedness plans can be severely impacted by crises and Draconian regulations, especially when these fluid situations keep changing. But here are some general tips for mitigating the worst impacts of an unexpected event.
10 Things NOT to do in a Crisis:
- DON’T ignore potential sources of credit. Even if you have some reserves remaining, if you are concerned about longer-term survival for your business, consider a small business loan or business line of credit through your (or another) bank. The U.S. Small Business Administration (SBA) is another good source of loan funding. In fact, we recommend making sure you have a line of credit in place just in case of such events – the last time you want to borrow money from a bank is when you really need it.
- DON’T avoid creditors. Be honest with them – if your business has dropped, let them know. If you are in a larger building, consider banding together with other tenants, who may also be seeing a drop in revenues, and asking your mutual landlord for reduced rent for a period of time, or a moratorium on rent collection for a few months. Individually, you can take a similar approach to both landlords and suppliers – they may be willing to be flexible to maintain a long-term relationship. Some contracts have “escape clauses” in case of forced business closures – in the maritime industry, this is called “force majeure.” Do your research, and don’t be afraid to reach out as soon as you know there are issues – often in a real crisis, people are willing to work together more than when things are “normal.”
- DON’T fail to read your insurance policies carefully. Your insurance may provide more coverage than you think via such clauses as “act of God,” “loss of business income,” or “force majeure;” see whether any of these applies in your case, and if one does, make your claim.
- DON’T ignore additional strategic revenue opportunities – think outside the box. DO consider targeting new/different market segments. DO consider new products or service lines – is there a need? Can you fill it? If the answer is “yes,” and the product or service fits your business, consider offering it, after a thoughtful analysis of the pros and cons. On the other hand, if a key product or service cannot be offered or is not in demand during a crisis (e.g., in-restaurant dining), consider vertical integration (e.g., food delivery service). If a product or service can be offered and is in demand, see whether you can deliver it differently and better.
- DON’T worry about maintaining inventory at pre-crisis levels. Review your existing inventory in light of your current business situation and customer demands and adjust accordingly. Also, review your current inventory management strategy and procedures – do they need updating? With today’s technology, it may be possible, if you are a reseller, to simply have products shipped from your suppliers direct to your customers, obviating the need for substantial inventory altogether. Conversely, if you need to maintain inventory and fear some items may become scarce (e.g., semiconductors), consider stocking up.
- DON’T rely only on your best customers. While it’s great to have them as a base, and you should never ignore a chance to help them, it’s also necessary to recruit new customers – this is true always, but especially in a crisis. Remember that helping people should always be your goal and grail. Be on the lookout for new problems to solve, and new people you can solve them for. In a crisis, it may be that you have significant opportunities to help others in new and profitable ways. Make sure you find them if they’re there.
- DON’T fail to pursue your marketing strategies. If there’s any time when clients and potential clients need to know you’re still in business, it’s when your community is suffering a shared crisis. Marketing outreach can provide an excellent opportunity to reach people who are either evacuated from their homes or kept isolated in them.
- DON’T purchase non-essentials. In a crisis, postpone plans for equipment purchases, expansions, or business travel – unless you feel there’s significant profit to be made. Think it through – if you believe there’s a real opportunity after analyzing the situation as a whole, you may want to take advantage. If not, put it off until the situation changes to make a resulting profit more likely.
- DON’T consider the crisis to be “downtime.” It shouldn’t be – this, particularly, is an opportunity to use your business time – identifying new lines of service or products and setting those in motion, making sure your team gets any training or continuing education they need, and – of course! – never stop asking your clients how you can best help them, whatever the situation
- DON’T be afraid to ask for help if you need it! There is no shame in this. In a crisis, people pull together – we’ve seen this time and again. Don’t let pride be your enemy here. And remember, even if you can’t pay back the favor, you will always, in the end, find an opportunity to pay it forward.
There’s a unifying theme here – it’s “Be Proactive!”
A crisis can make us all feel helpless, powerless, especially in the initial stages of a crisis. But we aren’t helpless or powerless against all of the factors. Some may be within our control, others within our ability to manage – so let’s focus on addressing those.
So, take charge, and take action!
How have you addressed the various business challenges posed by COVID-19?
Please click here to email me directly – I’d love to hear about your experiences.
Until next Wednesday –