Even during uncertain times like this, the No. 1 rule of business is: Stay in business! Washing your hands and practicing social distancing are important, but so is leadership during stressful and challenging times like these. This situation could reveal the type of leader you are … or could become.
Many of us feel like we don’t have any control over what’s happening, which is incredibly frustrating. So here are 10 critical actions that leaders can take right now.
(We realize that these recommendations may change as conditions change – but this is what we advise as of March 19, 2020.)
We’ve already begun doing most of these things ourselves here at NSCA. Last week, in preparation for what was to come, we conducted a work-from-home simulation. It was very successful and will be continued until we’re directed otherwise by the Centers for Disease Control (CDC).
Internally, send out a daily communication or use huddles as a platform for messaging. You can’t over-communicate during a time like this. Your employees must know that the best way to keep their jobs is to continue doing their jobs. (And not just the jobs they were doing, but the work required in this time of crisis, which may be different.) Rather than giving orders that may create angst or panic, your messages should reinforce the core values that drive the decisions you’re making.
Externally, send communications to all clients (make personal calls to key clients) to clarify your status and strategy (work from home, etc.). Keep them constantly informed. Many of you have done this already. The rest of you should do so immediately.
2. Liquidity and Cash Flow
Cash is king! Cash reserves, available financial resources, and a solid line of credit will be a priority. You need to focus on the cash side of the business. Review all monthly non-essential expenses. Define what “non-essential” means for you and articulate that throughout the company. Involve your entire employee base in finding ways to earn revenue and save money.
3. Financial and Investments
The Fed’s response over the past week has focused on replacing lost income for American workers – not driving stock valuations or 401k performance.
Don’t be overly concerned that the market doesn’t respond favorably to those moves. Before we rush into layoffs or other promises we make to employees, we need to:
- Understand exactly how governments will treat unemployment and reimburse for lost wages
- See whether we can extend lines of credit
- Make new projections about revenue recognition and look at our burn rates for cash
- Look for interest-free loans right away (with the Fed dropping the interest rate to zero, loans should be very low interest and could be extended without penalty)
The bond and equity market is watching one critical indicator to drive behavior: the timeline for when we expect the number of new U.S. cases to flatten. If we can achieve that “flattening” sooner than China or Europe through testing and following guidelines, it will dramatically decrease the length of recovery time.
4. Force Majeure
“Force majeure” is a contract clause or provision that excuses a party from not performing its contractual obligations if it becomes impossible or impractical due to an event or impact the parties couldn’t have anticipated or controlled.
Verify suspension of liquidated damages based on force majeure. To preserve what revenue streams we can, study this concept and use it as hotels and many other industries do.
5. Find Small Wins
Report on small wins as you present what’s happening. Don’t sugarcoat, but balance one negative with several positives over the next several days and weeks. Celebrate small wins as they happen. If you have a negative message to share, mention it first – and then note what’s being done to address it.
Once verified for accuracy, communicate information quickly – don’t let it cause too much angst. Just do it! Your team will be thankful. Communication with employees and your clients is most important.
6. Employee and Customer Support
Many of your employees are really scared about their families, their health, and their livelihood. There is a natural tendency to turn inward when something like this happens. This will undoubtedly create business distractions and loss of productivity; we shouldn’t overreact to that. Be understanding, kind, and empathetic.
We must also consider how we will support clients during this crisis. Gather teams of employees (remotely) to brainstorm, then act. Create a company-wide customer service response agreement. Your customers will remember this when things settle down (and they will settle down). Right now, you have the opportunity to let each of your staff members be a hero for someone else.
7. Set New Projections Immediately
As mentioned in our State of the Industry webinar in January, times have been so good that many of us don’t remember the bad times.
Our new reality dictates that we establish new goals – and strategies for achieving them. NSCA members have been running hard during this decade (or longer) of unprecedented global expansion. Use this slowdown to educate yourself, train your people, clean up, and catch up. Participate in webinars and training you’ve put off. Focus on and improve the handful of processes that drive customer and employee experiences. It’s time to spring clean all aspects of the business.
Look for ways to strip out needless activities and costs, making everyone’s jobs easier and saving money. Use this time to come out ahead when our “new normal” resumes. Conduct several projections of what 12 months of reduced expenses looks like with only nine or 10 months of anticipated gross profit. Or paint even worse scenarios. You need to know your sustainability factor. Implement those steps as soon as the directive is known from your lenders and government programs.
8. Returning to the “New” Normal
Plan for what happens during business recovery mode.
Several timeframe models have been developed based on COVID-19 containment and reduction of new cases. Based on this, we advise you to establish a window (we are using an eight-week timeframe here) to ramp back up. In many cases, with schedule compression already an issue, it could be much sooner. Again, cash flow and liquidity will be top priorities.
9. Using Personal Assets to Backstop the Business
This is a very difficult decision for owners and investors. Making payroll has been the biggest worry. Again, the goal is to stay in business. Any increase in the line of credit will likely be tied to some form of asset-backed securitization unless we have federal funds applied toward this. The size of your business will determine your qualification.
When considering propping up the business with additional debt or personal investments, consider other options as well. Several members are simply shutting down project-based divisions for 30 days and notifying clients. Many are discovering that the facilities they work in are closed anyway. I can help you run scenarios to guide you to a decision that’s right for your company.
10. Lead with Kindness and Compassion
With many of us just returning from the Business & Leadership Conference, where we discovered ways to let people bring their souls to work, we can certainly put those lessons into practice now.
Start by being an empathetic leader, which is different than showing sympathy for hardship. Truly imagine yourself with kids home from school, aging parents, isolation, concern about paying bills, financial hardships, or other struggles (or maybe you don’t have to “imagine” this at all). Set the tone for others in your company to show empathy as well.
If you need support yourself, use your network of trusted advisors – including NSCA. Be thankful for what we do have; have faith that we will pull though this. Call me anytime if you need a trusted advisor. We are here to help! -Chuck Wilson, NSCA Executive Director