2019 was a woozy year for our company. Although we had our best year yet, we were heavily focused on a lot of internal projects, including overhauling our ERP and accounting systems, which necessarily required us to also overhaul all of our existing workflows. Admittedly, we were stressed to get all of this going, but we just looked ahead to how glorious 2020 would be in order to remain positive.
2020 arrived and it didn’t start off great. If you’re in the consumer goods space, undoubtedly, you were already starting to feel things slow down in Q4 of 2019 due to the uncertainty of Trump’s trade war with China. (Remember when that felt like a potential crisis?) Then, because the Lunar New Year came a bit earlier than usual, meaning everyone in China returns home for two weeks, production slowed down earlier in the year than usual. By any standard, 2020 wasn’t off to a good start.
By mid-January, most of the world started to hear about the crisis brewing in China. Given that China isn’t the most transparent country out there, one could easily surmise that they must have thought they had a colossal problem when Wuhan went into a full-on lockdown, not to mention the obvious hit it would have on China’s economy. COVID-19 eventually spread to the U.S., states imposed various stay-at-home measures and here we are. I’m rushing through the last two months of the timeline because I have no doubt you know how that’s felt and I don’t need to explain. But any company that’s in the business of selling tangible goods — since every industry’s supply chain hits China at some point — was already off to a sub-optimal start.
So here we are. As an executive or leader, what do you do to survive in this climate? Here are three suggestions that we’re implementing.
First, this goes without saying, and I won’t go into too much detail about specifics because there are much more qualified people out there writing about this, but take advantage of all government aid, stimulus plans, etc. that are out there. The Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP), which you access through a bank’s SBA department, are two no-brainers.
Go get that money and, to be clear, it is critical and your civic duty that you do. As you may have read, it is awfully difficult for both federal and state governments to get money back into the hands of the public. Given historic unemployment numbers (and the word “historic” couldn’t be more of an understatement), states are understandably backlogged and unable to properly process unemployment claims. Recipients of government assistance can then, at least temporarily, pay that money back out to employees faster than the government can. The logic isn’t altogether different from flattening the curve in that the EIDL and PPP are buying the economy time so people aren’t thrown out into the streets without any money for basic needs.
Second, don’t forget your north star. Why does your business exist? I’ve seen a lot of companies in my space pivot to making masks, and don’t get me wrong, I think that’s generally a good idea, both because they give back to society at a time when there’s a critical shortage and it presumably helps to keep the lights on.
But don’t forget two things: When you hear of other people making a killing selling masks, putting aside the ethical issues, like everything else in life, I suggest you take it with a grain of salt; and there’s an opportunity cost associated with that pivot, in that your original line of business will be considerably weakened, especially if you’ve reduced payroll costs during this time of uncertainty. Consider whether it may make more sense to still focus on improving your product during this time. Our company is straddling the line by sourcing masks that we can donate but also working diligently to launch new product offerings for a new COVID-19 world.
Third, go into startup mode. Imagine what a COVID-19 world looks like for your business. Remember, we’re still only seeing first-order effects of COVID-19 with retail, travel, and food and beverage being hit the hardest. But that’s just the beginning, and such damage is going to spread to the rest of the economy, meaning that demand for your product will inevitably drop considerably. Do you need to pivot as a result? How do you need to change your product offerings? How does that affect your sales team’s ability to prospect? The point is, it’s time to potentially re-imagine your strategic goals and dig deep for short but intense and concentrated amounts of time as your teams work to get the business ready for this new world.
Finally, as depressing as things may seem, remember Winston Churchill’s words, “Never let a good crisis go to waste.” And, as famous early-stage investor Jason Calacanis is fond of saying, “Fortunes are built in the down market, and collected in the up market.” I whole-heartedly agree with this, as I got to see it firsthand when I started my career in the financial markets in the fall of 2008. This isn’t the time to be lounging around and watching Netflix all day. Brush that dirt off your shoulder, learn new skills and get back to work.
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May 04, 2020 at 06:31PM
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Strategy And Survival In The Age Of Crisis - Forbes
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