Crisis management in challenging times – putting a plan in place
In the first entry of our two-part series on crisis management, we covered the approach your business needs to take to deal with heightened circumstances and survive. This second part details how to draw up an action plan during times of trouble.
Let’s get straight into it and start by understanding what you are really facing.
The coronavirus pandemic has affected pretty much all of us as individuals around the world in some way or another. However, it has not and will not affect everyone equally, whether medically or as a result of the economic shockwaves that result from the pandemic. The same goes for businesses.
Depending on your industry, your business may or may not be severely affected by COVID-19. With your physical shop or offices closed off to employees and the public, or with supply chains interrupted, you may be struggling to get your products out to market or even struggling to stay afloat.
Or you may be fortunate enough to be operating with few changes, outside of the inconvenience of homeworking. This is especially true of digital businesses and much of the service sector that can continue to operate through video conferencing technology and cloud-based business approaches.
Whatever the case, your action plan will be guided by how much of your business has been exposed to the effects of the coronavirus. This needs a careful diagnosis of your exposure and risk and involves the following:
Determine the critical components of your business
Crises tend to reveal what matters most to us. When the very existence of your business is threatened, it should become immediately apparent which parts need to be maintained to avoid it coming to a grinding halt.
Define your “inventory buffer”
There is no doubt that your production pipeline will be stressed by the pandemic if it has not been already. Find out how much of your current stock or inventory will last before you can resupply. You may need to limit how much of it you can use to ensure your operations are not completely interrupted until you can restock.
Check your supply chain
The impact of the pandemic locking down cities and states across the globe extends to suppliers. Contact the people that are connected to your supply chain to get updates on their situation. Adjustments to your business’ output may be necessary to account for supply chain disruptions and bottlenecks.
Create a scenario plan for up to six months of shutdown
Although, at the time of writing, the coronavirus outbreak seems to be slowing down across Europe, it is likely that safety measures will continue to be in place for much longer to prevent a resurgence. The UK lockdown was reviewed only a few days ago, and extended a further 3 weeks, but it could last for as long as six months, according to the deputy chief medical officer for England. Despite the importance for a degree of healthy optimism for staff morale, it is vital to plan for the worst-case scenario.
Contact all existing customers to determine likely demand requirements
Your customers will be changing their spending habits amidst this crisis. Talk to them as soon as possible to know how much of your goods or services they need and what items they are prioritising throughout the lockdown period. Focus your efforts on responding to that demand.
Address Potential Shortfalls
Whether it is your supply chain or your customer base, your business will have gaps that need to be filled because of the pandemic.
You cannot simply accept these shortfalls if you expect to come out of this crisis with your business intact. It is imperative that you find solutions to potential problems as soon as possible.
Look for new markets and / or sources of supply
What you are selling may not have been seen as essential by some markets pre-crisis, but rapidly changing circumstances can give people outside your target market a whole new perspective on your offerings. Branding your products as affordable and good value for money, could be welcomed by many consumers who are now stressed and on a tighter budget.
The same could be said for you and your choice of supplier. Other companies that have lower prices for materials could be worth exploring to keep your operating costs low.
Consider new travel / transport opportunities
Shipping and logistics worldwide have taken a heavy toll since the beginning of the outbreak, and the difficulties could last for months. Transporting materials and inventory to and from your stores and warehouses will be more challenging, much less getting your goods to your customers. Consider new shipping and delivery companies with rates that are more agreeable to your business’ current situation and budget.
Optimise production and look for cost-saving measures
There will be sacrifices that need to be made to keep your business running. Do what you can to streamline your production processes and save on expenses. If there are products that have not been performing well or are not deemed to be essential, explore the option of halting production.
Identify new opportunities to collaborate
With new complications cropping up across every industry and demand for specific goods and services getting higher, there are needs to be met from companies and consumers alike.
Collaborate with other businesses where you can mutually benefit from filling gaps in each other’s labour force, marketing, production, logistics, or other processes. Private-public partnerships are also viable, as government bodies are uniquely burdened with social safety nets being strained by the pandemic. One example of this is the UK’s government’s request to engineering focused companies to manufacture ventilators, but there could be many more opportunities out there if you look.
Review Additional Options
Emergency situations necessitate looking at every option available, including actions that you would not consider under normal circumstances. Explore alternative avenues to problems that do not have obvious answers. With your business on the line, you cannot afford to dismiss any opportunity without carefully reviewing it first.
Look for innovative solutions
With standard operating procedures upended, embrace the freedom to overcome obstacles in novel ways. Allow the urgency you feel to push you to experiment and refine rapidly. Open your mind to ideas from your team, particularly those working directly with customers. Market leaders know exactly the biggest consumer pain points.
Talk to your competition
Every business owner is facing the challenges posed by COVID-19. Your competitors could have different issues that are specific to their businesses, but we are all being impacted in some way by the economic and social effects of coronavirus. Now would be the time to get in touch with the competition to see how you could help each other, especially if the industry you are in is particularly vulnerable.
Consider acquisition or exit
As hard as it might be to accept, the harsh reality of running a business during a global crisis opens up the possibility of putting it up for sale or shutting it completely. Your personal security trumps keeping a failing business afloat.
If your financial projections do not look healthy, it might be time to invest in the future and cut your losses. Create an exit plan to ensure you and your people can transition as smoothly as possible.
Commit Your Plan to Paper
Each problem you identify and each action you plan on taking to tackle the problems and challenges we have discussed here, need to be carefully documented, along with a timeline and the resources you need to execute properly. Write these down using a template such as a SOAP – Strategy on a Page - and review them at least every two weeks to track your progress. Your plan must be updated regularly to reflect the latest developments with your business and with the pandemic. A written plan is easy to communicate and share and enables you to briefly keep on top of the key actions. It will also give you the confidence you need to tackle your actions. Remember – if you have not written your plan down, then really you do not have a plan.
With a concrete plan in place to follow and monitor accomplishments, there is every chance you can successfully navigate this crisis with your business intact.