We find ourselves in the midst of a global pandemic. What originally seemed like an ordinary virus is now a full-swing outbreak, causing some countries to completely lock-down and others to restrict human contact — including many areas of the United States.
In this time of unprecedented uncertainty, many people are (understandably) concerned for the health of themselves and for their loved ones. Please, be safe; follow the guidelines that government officials provide and follow measures to minimize your health risk.
That being said, the health of our businesses is crucial as well. Once this Black Swan event is through, we will need to rebuild. This article is focused on rebuilding your business during, and after, these uncertain times. Ask yourself, “what can we do to maximize the likelihood that we will emerge from this event ready to get back to our plans and do our part to get our economy back on its feet?”
While some experts hypothesize that we could be largely back to “normal” in as little as two to three months, others — like Bill Gates, think it may take as long as 18 months.
That’s a pretty HUGE delta.
Maybe we’ll go back to normal in a few months; in that case, Q2 will likely be a free fall, Q3 will begin earnest recovery, and Q4 will be explosive growth as businesses race to save their year and get back on track.
But what if Bill is right?
This is the dilemma that we, as business leaders, find ourselves in. After speaking to dozens of business owners, line managers, and team leaders, I’m finding that most organizations are moving towards one of two camps.
Camp 1: Hunker Down
Businesses in this camp hunker down, cut all costs, minimize every possible expense, shutdown all non-essential projects, and wait it out. Some find themselves in this place because their business model is unfriendly to a “shelter in place” or quarantine environment (non-takeout restaurants, bars, clubs, conferences, travel companies, and the firms that support those industries). Others are concerned that the inevitable recession that the coronavirus causes will overpower and outrun what their reduced revenues and reserves can support.
Camp 2: Pivot & Be Opportunistic
Firms in this camp re-prioritize projects to ensure mission-critical systems are taken care of, seek out and look to capitalize on displaced talent (who just a few weeks ago were untouchable), and strategize on what they can do to take full advantage of the rebound and the inevitable changes in the market that this pandemic will bring.
Both of these are valid responses to the situation, but each requires a different strategy. I’m not going to persuade you into pursuing a particular camp or judge you for which camp you fall within. Instead, this article is about getting real with yourself and deciding which camp you are in and taking the appropriate action. The more quickly you make the decision as to which camp best serves your needs, the sooner you can start to execute on the relevant strategy.
How do you decide which camp you should be in?
You’ll decide based on your view of:
- The industry that you are in
- How quickly we will get past this
- How rapidly we will move through the recession
- How your revenue and reserves will support you through that period
While I will say, emphatically, that Prominent is firmly in Camp 2, I am not writing this to steer you toward our camp, I am writing this to offer strategies for success, regardless of which camp you move your company toward.
Camp 1: Hunker Down
If you are waiting out the storm, then these strategies and actions, outlined below, will serve you best.
Minimize All Expenses
- Focus on revenue, cash flow, and liquidity.
- Examine all expenses — see if they are negotiable, able to be reduced, or even cancelable.
- Reduce licenses, cancel SaaS products that aren’t critical, and renegotiate subscriptions.
- Cut staff based on criticality, not on their tenure. Be wary of letting go of contractors or consultants who are critical to your organization because they aren’t “permanent” employees and instead focus on keeping those that are essential to keeping the company alive.
- Consolidate work and add responsibilities to the remaining team members. This will not be popular, but the truth is that everyone will need to pick up some of the slack that was created by reducing the headcount.
Protect Key Players/Staff
- Once you have made necessary cuts (if cuts are even necessary), meet with all remaining team members to reassure them of their job security, thank them for their understanding, and motivate them to work together to pull through the crisis.
- Plan for weekly team meetings to go over wins, communicate news directly, and shepherd team morale.
- You should never underestimate the mobility of a true “Rockstar” employee — consider equity options for key players who are being heavily impacted by the current situation.
- Focus on core systems and critical functionality.
- Now is not the time for frivolous projects. If it can wait, make it wait.
- If it doesn’t keep the lights on or move the revenue needle, put it on the back burner.
- Don’t ignore maintenance during this time, the last thing you can afford are system crashes.
Extreme Measures/Last Resorts
- Cut business divisions that are not a part of your core business.
- Consider hibernating the business.
- If you need to sell assets, don’t wait until you can only get pennies on the dollar.
- Look for buyers before you need them (M&A typically takes at least 6-months to navigate). If you look at this option, consider spinning off business divisions that are outside your core functions in order to fund the core business.
Camp 2: Pivot & Be Opportunistic
If you are positioned to look for opportunities during these times, then these tips and actions, outlined below, will help you.
Take the time to plan the next 2 quarters, asking yourself…
- What is my priority?
- What impact is the pandemic having on my Ideal Customer?
- How can I best serve your existing clients/customers?
- How can I get the word out to your prospects that you are still here and looking to earn their business?
Don’t Neglect Business Development/Sales
- Now is not the time to pare down the sales team.
- Your services could be what your customers need, especially if they also have the ideology of this camp.
- Sharpen your marketing message by asking yourself, “who is my ideal client?” Then, focus and prioritize them.
- Increase your outreach volume.
- Take the time to work closely with your sales team to ensure their message is both effective and sensitive to what others are experiencing (now is not the time to become a meme!).
Protect Key Players/Staff
- Uncertain times create uncertain team members. Uncertain team members are at risk. Increased communication, or even over-communication, reduces the risk of them drawing negative conclusions about the state of the company.
- If anyone is let go, or if high-profile team-members resign, then it’s crucial to ensure that the team understands that the reason was not because of the pandemic or because of the health of the organization.
- Take the time to recognize the hard work your team is doing and to thank them for their diligence. Not only do they deserve it, but it will keep people moving in the right direction. Again, we want to push back against uncertainty, which means that the team needs to know that they are valued and appreciated.
- Don’t unnecessarily cut contractors/consultants. If you do, it’s almost certain that they won’t be available in a few months when you need them back. If the project they’re working on is complete, then wrap it up like normal and resist the urge to make the “easy” cut. If reductions are necessary, base them on criticality to the next 12-month’s project plans — not on tenure, employment type, or other factors.
Prioritize Projects & Operations
- Ensure critical projects within core systems are cared for first.
- Look to add functionality to existing systems that are either meaningful to existing clients or will attract a larger swath of your market.
- Get feedback from your clients and prospects to see what you can add that would be meaningful to them (focus on ROI and cost-savings — in a recessionary environment this is what typically gets the most attention).
- Based on your experience in your particular business, ask yourself what impact the pandemic will have in the usage and buying patterns of your customers. Then, build products or offer services around those changes in buying patterns.
- We are in the longest running IT talent shortage of my twenty-year career. People will be available who otherwise wouldn’t be — capitalize on this.
- Proactively and actively recruit candidates that you have had your eye on.
- Be aware of companies in your geographic area, industry, and value chain as some of them will start offloading personnel, assets, products, and in some cases entire divisions, which you can make use of.
Regardless of which camp you are in, or whether or not the pandemic will last as long as Bill Gates thought, one thing is certain — we went into this downturn with the longest lasting Technology talent shortage I have ever experienced. I am certain, beyond the shadow of any doubt, that when this is over, talent will get snapped up almost instantly.
Any projects that you are looking to get completed after the pandemic will either need to be completed by your internal teams or you will need to be prepared for a talent war. I would wager that we will find ourselves in an even more dire IT talent shortage than what we faced going into this. For those that are unprepared it will be an uphill battle, at best.
Ultimately, this is just a high-level overview of my perspective on our current situation. If you would like to discuss the strategies for success in either camp, please don’t hesitate to reach out. I’d love to discuss, share ideas, and offer any help that I can.