Managing the Chaos, Were You Ready?
NO ONE COULD BE TRULY READY FOR COVID-19, BUT…
The tag line I use on my new book and website is “Control the Chaos of Entrepreneurship”. The COVID-19 coronavirus certainly has created chaos for business, so it is fair game to ask me now what should be done? What do you do right now to survive this crisis? While that is a fair question, I don’t think you are going to like my answer because it has more to do with what you should have already done, not what you should be starting to do now. If you were not prepared, all you can do is react. Not prepare for the entire shutdown of the economy, that is not what I am talking about. Not prepare for your business to be totally shut down. So, prepare for what Mitch?
If you have gotten nothing else out of my blogs and books over the years, it should be that planning is the key to long term success. Plan for a pandemic though? Well, yes and no. As you grow and mature you probably will develop specific plans of what to do in case of crisis situations. When I worked for GTE Corporation, we always updated various disastrous recovery plans that were intended to help keep the GTE telephone network operating in any type of disaster. In fact, during the 9/11 crisis, along with AT&T, we were well prepared to send large mobile telephone systems to New York City within 2 days to keep the phone networks up and running for first responders and others. The main city network was housed in the World Trade Center that had collapsed and was destroyed. But when you are small or just getting started these are things you probably have not even thought about.
Many medium, and most small, businesses do not have disaster recovery plans for their businesses. It is the rare business, of any size, that has a plan for an international pandemic. So, what do I mean by planning for a pandemic or another large crisis that could cripple your business? It has to do with everything I have blogged about in the past…business planning. Having both well vetted long- and short-term plans documented. Having documented goals throughout the organization aligned to those plans. Having well documented and oiled processes and systems in place to support those goals, measure results against those goals, and report on-going key metrics to management so they can make quick well supported decisions. And yes, as you grow building redundancy to minimize interruptions and ultimately plans on what to do if something really bad happens.
Until then, it is having the right people and culture in place so that quick actions can be taken when required. Having trust and good lines of communication so that employees know that the direction coming from the top can be acted upon without fear of retribution. I cannot stress these later points enough. Having the right team will be critical to survival when a real crisis hits. Trying to find them right now is almost impossible.
Finally, most companies that have accomplished the above in a truly effective manner also have the number one key requirement for success during crisis: effective leadership. Good luck finding that right now if you are in need.
Those companies that do have solid plans, processes, systems, cultures, and people are typically much more prepared for disaster even if they don’t have specific plans. For example, one key metric businesses strive for is cash positive operations on a monthly basis. Once reached, one of the next key metrics businesses try to reach is savings equal to several months of key operational expenses. They also have business interruption insurance, and other types of support mechanisms available. That means they can take a shock and still survive. What if your top customer, who represents a significant amount of your on-going cash flow, suddenly goes out of business? Who is going to do what? Which goals will be put aside for now?
Those that lack any portion of the above, or have implemented them haphazardly, are going to struggle. Many may not survive and will go out of business. It is a shame, but it is what defines the real difference between well run companies and all of the others. Eighty plus percent of all businesses fail in their first five to ten years. I contend it is their failure to implement these things effectively that drives them out of business. It is mostly a failure of leadership because these things are not rocket science, yet they are fundamental to survival.
Real leaders understand their vulnerabilities and do not stand upon past success to generate future success. No, they continually examine their plans, processes, systems, culture, and people to ensure they are prepared for the future, no matter what happens. As their companies mature, they do develop plans that envision crisis and that makes them even more prepared.
But even great companies can get sidelined by a crisis, so while planning and structure are the real keys to survival, sometimes survival during a crisis depends on the help of others, including stakeholders, vendors, employees and even the government. In these times, great leaders understand that reaching out quickly with persistence, and being flexible are the key to survival. They know enough about their industry and threats, so they know where to reach out for help. All good leaders can understand these things and be prepared, it does not require being a large profitable company. A good SWOT analysis of your business can give you amazing insight into where to look and what to prepare for.
Your challenge this month is to do a SWOT analysis…strengths, weaknesses, opportunities, and threats. Be honest and be real. A SWOT is not the time to tell you how wonderful you are or to provide excuses for shortfalls. Focus on the weaknesses and threats for the answers to where you should search for answers to crisis management. Sure, right now, in the middle of this crisis it may be a little late, but when things calm down, make this a top priority. Or if you find you have some extra time on your hands these days, it may just be the perfect time to start!
We can help, reach out!
Mitchell Bolnick – The Excel Consulting Group