At a time of global or national crisis it is understandable and normal for the worries and problems to overwhelm and to block the ability to step back and take stock. Here are some things you need to consider and start taking control.
There are 3 main reactions people have and you need to make the decision as to how you choose to react:
All three of these are normal and you may bounce between the first two before you feel ready to reach the third reaction, however the sooner you get to number three the better!
Products/Services review. What products or services are you providing that will be hit by the crisis? List everything that will be hit and focus on what you can do to minimise this impact. Can you:
New Products/Services. Is there an opportunity to bring on a new product/service to fill the gap? What is the need that has been created, what is the problem that clients/potential clients need solving now? Is there a gap or new need that you can develop?
Market. Can you refocus your target market to one that is less impacted by the crisis? For example if a Travel Agent and international travel is impacted can you refocus and concentrate on the domestic market especially taking into account any good deals with local providers who are cutting package costs to stimulate local business?
Partnering with complimentary businesses. Many will be impacted so by working together with complimentary businesses to put packages or shared offers together can spread marketing and supply costs but also build strong relationships that you can leverage when things improve.
Government Departments. Are their support packages that you can tap into to get some help to maintain your business? Has the IRD introduced tax breaks or extended payment terms? Explore to see what is on offering and with the IRD if you are going to have a problem contact them to discuss BEFORE the payment is due as this gives them more options to help.
Cost review. Are there costs that, even in the short term, you can cut or reduce to assist the all-important cash-flow? Any luxuries that your business has enjoyed or software costs that in the current environment may not be needed (or can reduce the package to a lower level) and you can always reinstate these once things have stabilised. Try to keep stock levels at a minimum however check that suppliers can quickly supply if needed – are you holding any old stock that you can sell as loss leaders (or offer as give-aways with new sales) to stimulate sales and income.
Client expectations. Be aware that clients will know you are hurting and most likely will try to leverage this by getting you to reduce cost price and also client complaints may likely increase for the same reason. Manage this with care and be ready to draw the line at a level you are comfortable with and not get drawn into the “fire sale” mentality. Suppliers may also be hurting and ask you to cut margins, consider this carefully and balance between maintaining the relationship and still covering costs plus some. Bear in mind they need to be made aware any reduced margin is short-lived and you will revert to the original agreed margin again soon.
Talk to people. Talk to:
Debtors. Remember that other companies are liable to be suffering too which will mean that they will delay or even default on payment. If you haven’t before start asking for deposits and if cash-flow is suffering then consider invoice funding/factoring to get paid sooner and give your debtors time to pay, however closely monitor this.
Marketing. You should have a look at what message you are using in your marketing and is it appropriate and responsive to the changed environment. What marketing channels are you using and are they too appropriate as things may have changed, e.g. if marketing internationally do you need to refocus locally. As much as possible try to keep some marketing going, you need to show clients, suppliers and creditors that you are still doing business.
Yourself. Most importantly take care of yourself, give yourself permission to be worried and concerned. Take some time to get your head around the current situation and when ready take control of the situation rather than allowing the situation to control you.
Posted: Monday 16 March 2020