Without question, the trauma and disruption from COVID-19 is seriously impacting the economy.
Balanced budgets are visions of the past. Borders have closed, and anyone coming from ‘outside’ is quarantined and viewed as ‘a potential carrier’. People are not allowed to go to other states or countries, and no one is interested in visiting exotic places on cruise ships!
Even after we’re all vaccinated and ‘feel safe’, we’ve been told to expect more ‘radical disruptions’ from externalities.
Is this the ‘new normal’?
And if so, should a company that was previously scaling-up even try to rebound and grow again?
First of all, it’s important to understand that a significant number — between 25% and 30% of Australian companies — have not been negatively impacted by the pandemic.
They have a product or service that someone needs or wants — such as hand sanitiser, protective gear, courier services, water testing, construction, grocery stores. (Don’t we all wish we had stock in online meeting services such as Zoom?)
But a large proportion of the other 70% have been negatively impacted, especially those companies related to travel, tourism, entertainment and sports, retail, personal services and exercise, and restaurants and cafes.
They are doing it tough and are grappling with a common set of five issues.
- Customers. “What can I do now to make sure my customers come back? Where do I find new customers?”
- Products. “I can’t get my product or key components of my product, so I have nothing to sell. What can I do?”
- Finance. “I am running out of money and can’t pay suppliers, my landlord, or my employees. What should I do?”
- Leadership. “How do I lead and manage my employees when they are all working from home?”
- Self-management. “How do I remain confident that we will get through this and not be consumed by anxiety and fear?”
All the founders of scale-ups I know are working hard to survive — and those experiencing this forced shut-down are using the time to prepare to rebound and grow again.
For example, they are:
- Looking at their company financials and estimating their runway (the number of weeks before they will run out of cash);
- Looking at ways to cut costs and figuring out how they will generate revenue from products, services and new customers when they rebound;
- Researching information on all the state and federal government grant programs, including the JobKeeper program, then applying for grants where they qualify;
- Talking with their banker about a loan;
- Talking with their landlord about deferring some or all of their rent for a few months;
- Looking at their old (pre-COVID-19) business model and thinking through whether that’s going to work going forward; and
- Looking at each employee’s knowledge, experience and skillset and deciding whether that employee will be able to take the company forward after the pandemic.
In essence, they are using the current crisis to assess where they have been, where they are, and where they want to go in the future.
As we often hear: “There’s nothing like a crisis to focus the mind.”
We cannot control the pandemic, or the forced changes in our lives and businesses, but we can control how we respond.
Here are five basic business principles around which founders must have absolute clarity as they respond.
Mission, values and vision
A company’s mission is what a company is in business to do — why it exists.
So, ask yourself whether your company’s reason for being is still relevant. If yes, then figure out a way to stay alive.
Your company values guide your decisions and define your relationships with customers, employees, vendors, suppliers and everyone else.
Your vision describes where you want to take the company over the next three years. There is no guarantee that you will be able to achieve that vision — but there never was!
You may not be able to get all the way, or you may need to pivot and change direction several times, but developing a vision to guide you after the pandemic will enable you to rebound faster.
Customers
Given the uncertainty about the duration and long-term impact of the pandemic, consumers have cut back on their spending (except for on toilet paper). Many companies have experienced a dramatic decrease in demand for their products or services.
If you have, be proactive and reach out by e-mail, mail or phone to your best customers and stay connected to them. Track their changing needs and figure out if you can offer something else that they value — and will pay for.
Spend time thinking about how to reach new customers. Decide whether your message needs to change about what you offer or how it is delivered, or both. Look at the channels you have been using and explore new ones to find new customers.
Think hard about all this — because without customers you don’t have a company.
Products
Depending on what new products or services your customers need and want, think through what it will take to source, make and deliver them. If normal supply chains are not working, what other components, materials or processes can you use?
Aussies and Kiwis have always been incredibly innovative, so think about what different products or services your company might offer and what changes can be made in how they are delivered.
Organisation
We’ve been told to stay home and work from home. If you have employees who match your values and are high performers with a good work ethic, ‘where’ they work should not be a problem.
But how you lead, your communication skills, the clarity with which tasks are assigned and how you hold people accountable — especially when working at a distance — will either set your company back or get your scaleup ready for a rebound.
Measurement
Use a set of metrics and measures that your team can understand, and make sure everyone knows the implications of missing targets in terms of sales, cashflow, timely delivery of a product, or response time to customers.
Failure of any of these will impact your revenue and bottom line, and can mean the difference between staying in business or going under. Measurement enables everyone to monitor progress, recognise outstanding performance, and celebrate successes.
These principles will not only enable your company to survive, but they will also enable you to prepare your scale-up for rebound and future growth.
Every company, whether they are continuing to scale or are in ‘forced shut-down’ should focus on these fundamentals.
Your response to the pandemic will be a major determinant in whether your scaleup survives, rebounds, or continues to grow.
Jana Matthews is the chair in business growth and director at the Australian Centre for Business Growth at the University of South Australia. She has a doctorate from Harvard, has founded five companies and written eight books, and was selected as one of the most influential women in Australia in the AFR and QANTAS 100 Women of Influence Awards 2018.
This article was first published by Smart Company