The last week has been busy for everyone. We have a very special thought for all our clients who have closed their doors and who have seen their sales collapse in the last days. There is nothing more ruthless than the market, especially when it decides overnight to change its rules.
For others, who were not affected in the first wave, but who are very likely to be shaken up in the 2nd and 3rd wave, following the economic slowdown that will affect us all, here are the three stages that we deem it right to deploy now For Your Business :
1 – Plan your cash
In times of crisis, we will line the walls with the following saying “Cash is King”. Preserving cash is essential, the cash available to the company will allow it to survive or not. It is the first place where our attention will be focused on.
It is important to start now to put in place different scenarios and related measures.
- Scenario “Everything is cool in Montreal” – Sales remain
- 1 to 2 adjoining scenarios – Decrease in sales by 25 to 50%
- “ Judgment Day ” scenario – Sales drop drastically (eg 75%) or fade over 3 months.
In all scenarios, the company should have a clear game plan on how to keep the organization going, no matter how drastic it may be. An entity must ensure its long-term survival, and planning will enable it to emerge from this crisis stronger.
Among the austerity measures that can be taken:
- Go dormant (stop spending at least while waiting for recovery)
- Reduce non-essential expenses
- Cut in all office expenses
- Cut representation costs
- Review Terms of Reference
- Review all software fees
- Review all software fees
- Request a Capital Leave and Interest Stay from your lender
- Obtain a working capital loan
- Defer tax payments and installments
- Reduce your salary
- Announce a wage freeze
- Implement measures to reduce hours and work-sharing
- Dismissal of less performing employees
- Temporarily lay off employees
- Launch a round of funding now
- Sub-location of offices
Before making radical decisions, it would be good to review all options, even those that are less conventional. Feel free to ask your employees for ideas and suggestions, you may be surprised.
I invite you to read the following article on measures to consider prior to layoffs. The article also refers to the Swedish maxim “Is i magen”, which means keeping your composure in a critical time. The leader is asked to be stoic in the face of the crisis, we must not react too quickly or too late.
2 – Maximizing the application of available measures
To keep up to date, our team uses this table to list all the measures available to our customers. I invite you to go through it and see what might apply to your company. From the outset, all businesses should guard against the 10% wage subsidy to small businesses for the retention of employees, this is a $25,000 available to a large part of them.
3 – Emerging stronger from the crisis
« Never let a good crisis go to waste »
– Winston Churchill
With each crisis, the order of things changes, there will be many losers, but also winners. The new cards that are being brewed may allow you to revisit guarded pursuits or ideas that you have pushed far into your priority list.
Spirits distillers turn into hand sanitizers, car makers make respirators for the sick, as their ancestors converted their factories to make bombs during the Great War. Drastically, the consumption habits of the planet have changed, and we must believe that they will remain forever modified. It is time to think about what the new population will demand as an offer.
Telework pushes companies to revise their models to work as a team. A fellow accountant who went to a firm without an official told me that it was an event, major renovations to his building, which forced him to send all his employees home. When the renovations were completed, no one wanted to come back to the office including him! Sometimes, too, companies lack the time to work on internal processes. What an opportunity to have lots of them all of a sudden to improve the business.
Business Model Innovations
Your company may be hurt by the COVID-19 crisis, it may even go bankrupt. It’s serious, it’s sad. However, I am deeply convinced that entrepreneurs have the confidence that they will be able to recover from failure. If not, why take so many risks?
The crisis may have changed the rules of the game so radically that the very nature of your expertise no longer holds water.
It is also possible that the recession proves that the business model was fragile and did not generate enough liquidity to ensure sustainability.
It may also be, as I have seen, that this is the break you need to review your priorities.
In any case, we as an entrepreneur must mourn a world that has changed and overcome the gloomy atmosphere that has beset us for the past few days. It’s time to roll up your sleeves, from our living room and our improvised offices. There will be before and after COVID-19, for the world, and your business.