Pondering the Theory of Strategy Entanglement amidst the novel COVID-19 uproar and the potential of a global economic failure directly below our feet, it’s time to redefine strategic planning for business. What can a business do without clients buying their services or products? What about paying clients that can’t get full support because company workforces have been shaved in half due to cost-cutting?
The general principle of entangled strategies is that there are no strategies that operate independently of themselves. Simply put, nothing can perform well in a silo. But that can change quickly when markets, companies, and consumers start to silo off out of fear, government orders, or social distancing.
Suddenly, companies are no longer bringing in revenue, which has a drastically larger impact than just on employees and customers. It can mean that commerce slows to a halt, maybe quicker than expected, and that ripple effect can and will cripple markets.
Taking Stock in Uncertain Times
It might be too late to mention this, but the best plan for dealing with a crisis is to have that plan already in place well before the crisis hits. For many, this might not be possible, so the first thing you’ll need to consider is taking an inventory of your current situation.
If your company has a cash reserve or funds put aside for rainy days, then you’ll be able to weather this storm much better than others. If your company doesn’t have that, then it’s time to get granular and make some hard decisions.
- What is the current financial position? If we were to receive no more revenue from today onward, how long could we sustain?
- What expenses do we need and what can we cut? Salaries, technology, tools, equipment, marketing, advertising, etc. – all of this could be on the chopping block depending on how dire the financial position is.
- How many customers are still paying us; how many have halted their invoices?
- Where can we generate more revenue? Or where can we add more value to revenue generating customers?
As a business owner or leader, you’ll need to reassure your troops. That needs to be backed by real numbers, so take a look at the above questions and get them answered. An honest conversation with your employees about the company’s situation (or plight) may be the only way to get everyone pushing in the same direction.
The governor of New York called for a state-wide shutdown of non-essential businesses on Friday. If you don’t run a grocery store or pharmacy, then your business may be in for hardship the likes of which we’ve never seen.
As everyone looks to make the most of their situation and survive, here are some suggestions if your business doesn’t have the reserves it needs to make it through this crisis:
- You’ll need to triage your finances right away, just like if you lost your job. What are your fixed expenses, non-fixed expenses, what can you do without, what can you not do without?
- You’ll need to figure out if there’s a way to run the business remotely. Can you send employees home with a laptop and needed software? Agencies, digital product companies, and sales organizations would be the most likely candidates for this.
- Can you sell your products solely online for the time-being? If you don’t have an online presence (then you’re seriously behind the time), but now would be a great time to start your e-commerce storefront.
- Are there complimentary services that you can use to keep your “non-essential” business operational? Like delivery services for restaurants.
- Can your company get assistance from the government or state-funded programs? You’ll have to do some digging on what your state is offering.
If remote work is not an option for your business or employees, then you’ll have to consider temporary lay-offs or more flexibility until the world gets through this pandemic.
Communication with Existing Customers / Clients
If your business is still able to operate, then one of your core strategies should be good communication with your existing clients or customers. Obviously, those customers are facing uncertainty as well, so try to put that uncertainty in front of both parties—the business and the customer—not between the two.
Transparency is key while communicating your situation. We are all human and clients will most likely empathize with your position because they’re going through it too. Give them information on what your business is facing right now in terms of challenges and give them insight into the actions you’re taking to mitigate risk.
These really are unprecedented times, and they call for unprecedented measures:
- Chat with your longest and most valued clients first
- Be honest about how many employees you’ve had to let go
- Let them know if you’ll still be able to perform the same level of service for them
- Let them know if production will suffer
- Reassure them that you are doing everything you can to minimize the risk to your business and their business
Strategy in times of crisis
Since the coronavirus doesn’t seem to be slowing down (except for a few countries), you’ll need to start thinking long-term. Depending on what you uncover during your situation inventory (i.e. financial triage, must-haves), you should be looking about six months to a year out before things get back to normal. But let’s start short-term as there are many things that could change (for the worse) in the weeks to come.
Create a short-term internal plan that maps out the following things:
- Steps being taken to minimize the spread of coronavirus (this would be good to share with your employees and customers)
- Financial forecasting in one to three months time
- Opportunities to serve clients/customers through digital mediums including mobile
- Worst-case scenario – exit strategy (it may come to this)
If you can make it through the next 3 months and you’re still operational, then focus on six to twelve months.
The sad news is that some businesses will survive and others will not, which may just be out of your control. Don’t put your health at risk just to keep your business afloat. Times will change, and times will get better. There are plenty of resources out their for small businesses right now – just check out your local chamber of commerce. Or the US Chamber. If you’re interested in starting an online business, check out the Ecommerce Business Blueprint on Shopify.
For a final note—let your human side show—we will all need to hunker down, do our best, show compassion, and keep ourselves, our loved ones, and our communities safe during these next few months.