Top 5 Crisis-Response Steps for Entrepreneurs
By Nionica Starc
In a matter of months, the coronavirus outbreak has sent shockwaves through the economy and the business sector. The world came to a standstill, and businesses were forced to shut their operations down, except the grocery stores and essential service providers. At the same time, many organisations, whether IT or assignment help services, adapted to the remote working system.
Amidst the mayhem and chaos, small businesses and startups are bearing the brunt and struggling to keep business afloat. In such unprecedented circumstances, it’s difficult for entrepreneurs to have a clear vision of their business’ future. But it's significant now more than ever that entrepreneurs look for opportunities to sail through this crisis.
So, if you’re looking for the light at the end of the tunnel, we have some useful ideas to share. Implementing these ideas will help you reduce the impact of this crisis to a great extent.
1. Develop a clear crisis plan
The plan you chalk out for your risk assessment framework should include SMART objectives and actions. The plan will also take into account your key stakeholders, focus on their needs, and determine the best ways to address these needs.
The stakeholders will involve the staff, the shareholders, the customers, the suppliers, the public, the government, and the media. The crisis plan needs to focus on short-term actions as we are in a survival mode.
2. Reform and reinvent your business model
During the testing times, it’s always wise to reinvent and re-evaluate your business model. So, consult with your team and advisors and ponder over your current business model. Determine the core and non-core activities, and agree on the basic pillars for transforming and reinventing your company.
You need to check and optimise your cost structure and take sufficient measures to match your expense forecasts with your revenue projections. In this case, you may have to delaynon-critical recruitments, stop all non-sales related expenses, and restructure the payment of salaries.
3. Manage your cash flow properly
Your SME will thrive on the capacity of your cashflow predictions and your corrective measures to manage the obvious funding gaps during the times of crisis.
You must pay special attention to negotiating better payment terms with the suppliers. You can urge your consumers to pay you earlier (you can offer prompt payment discounts), and keep your inventory levels in check, to optimise your expense structure.
You can also connect with your external investors (banks and financial service providers) and your shareholders to seek advice on the most pertinent ways to address future cashflow gaps.
4. Prepare a contingency plan
Create different scenarios (realistic, conservative, and aggressive) on the possible results of the crisis. Then determine the processes that need to be implemented for each of the scenarios with clear ownership and proper timing.
Remember, tough times call for tough decisions. So, you have to have the courage to take tough decisions. This will ultimately ensure the long-term survival of your company and the partnership you maintain with your stakeholders.
5. Diversify you consumer base
Product/market diversification is a brilliant way to minimise the impact of the crisis on your SME. Hence, it’s best to note down all the growth opportunities available and prioritise them through some vital screening factors. These factors include the level of investment needed, the ease of execution, and the financial returns.
This is a crucial practice that has to be implemented in collaboration with the board, the team, and selected advisors.
6. Maintain a positive company culture
Make sure you maintain a positive, can-do attitude during the times of crisis because all your stakeholders will be looking at you for inspiration. They will judge you based on how you uphold your business’ values as you go through this transition period.
Passion and faith are often contagious, so you must have plenty of it to share. You also need to share quick wins and don’t hesitate to ask your team members for help in need.
7. Reshape your business’ portfolio
When it comes to restructuring your business’ portfolio, you need to move your money from the crisis-endangered industries to safety. In fact, it’s better to move it to the projects which are likely to grow steadily, even amidst this crisis. For instance, the stock value of Zoom has more than doubled since the beginning of this pandemic.
You shouldn’t feel bad about moving money from the industries that are hurt. Remember, you’re doing good for humanity by moving your funds into what people need the most during these turbulent times. Today they need Zoom and other work-from-home solutions, or the daily household essentials. Anything beyond that is a luxury.
8. Prepare for the economic meltdown
It’s important for entrepreneurs to run financial models with recession assumptions to assure that their business is prepared. They must create crisis-induced recession strategies.
Ensure that any progress you’ve made in the last five years to create a diverse and inclusive workplace is not nullified due to layoffs or restructurings.
9. Maintain transparency at all cost
The ideal way to prevent the spread of the FUD (Fear, Uncertainty, and Doubt) rumours in your company is to be as transparent and accessible as possible with your key stakeholders, i.e. your consumers, your employees, your suppliers, and your shareholders.
This direct and open attitude has to be consistent across different channels of communications, be it in group meetings, social media, one-on-one discussions, or announcements.
10. Communicate clearly at all times
This is applicable both in case of your business’ internal communication and the communications maintained with the consumers. Make sure to employ all means possible to present clear statements, identify the top contributors, update action plans, celebrate success stories, and shed light on the new developments.
It’s also vital to actively listen to the main concerns of your customers as it’s one of the most impactful ways to build trust. Effective communication to all your stakeholders (be it your employee or your consumers) is one of your best success factors during turbulent times.
The crisis management strategies mentioned above offer a proper foundation to navigating your business processes through troubled times. Entrepreneurs must adapt and pivot to make sure their businesses thrive irrespective of the crisis. While the crisis may come and go, it's vital for the entrepreneurs never to lose sight of their business objectives.
Author bio: Nionica Starc is a senior marketing manager for a reputed corporate firm in Australia. Wright holds an immense understanding of the marketing research and automation process. He has received his MBA in marketing from Federation University. He’s also actively associated with MyAssignmenthelp.com as an academic expert.