The fast spread of COVID-19 pandemic is significantly affecting people and businesses around the world. As the epidemic increases like wildfire, it’s disrupting almost every business activity and corporate practices, and changing the way things are being conducted. And resulting in financial distress and managerial predicament in many businesses.
The novel Coronavirus is testing business owners to a limit, analyzing their capacity to handle circumstances that is an inevitable part of the management. In fact, as per PwC’s Global Crisis Survey, nearly 69 percent of leaders have experienced at least one corporate crisis in the last five years in their companies.
In this article, I will give you five proven tips that will turn out to be quite useful when it comes to rescuing businesses and companies which are on the edge of failure:
1. Evaluate the Damage
Companies don’t collapse overnight, so the first thing you should do when you find out your business is experiencing a turbulent period is to precisely figure out how much trouble it is and how much damage it can cause. It’s not possible to tackle any issue if you’re not prepared to look at it straight into the eye.
In fact, it’s easy to ignore the indications when you’re preoccupied with your day-to-day business activities. But that unwillingness to perceive things before happening can lead businesses to big disasters. So It is essential to put forth some effort to find areas in which the company is dropping and identify the gaps that lead to complications and then use some smart and practical strategies to sort them out.
2. Economy Cannot Be An Excuse
Either you run your own company in a recession or a time of prosperity, the economy shouldn’t force you to shut your company’s doors. It’s evident that developments in the economy will impact your business. Still, the fact is that consumers will continue to purchase your product or even use your service if it’s worthy of it. So you need to prioritize the interests of your consumers first and revitalize your marketing strategies.
If you’re not sure exactly what your consumers want, don’t afraid to ask. Check-in with then no matter how your organization is doing – striving or thriving – and ensure that you and your clients are on the same page. There are some low-cost ways to access your clients, such as direct email or messaging through social media (LinkedIn, Facebook, Twitter, Instagram), use these platforms, and stay connected with them.
3. Face the Truth
A leader for a failing enterprise business must prepare a disaster strategy, turnaround mission, and make sure that you are realistic towards the approach you plan for yourself. Figure out if your plans and strategies are functional, and if the business is turning around.
Neglecting the challenges your company faces will result in the timeframe being off and your proposed strategy being flawed and defective.
4. Get Employees’ Trust
In difficult times, maybe one of the most effective choices is to build more trust with your employees and work cooperatively as a team to solve your problems. As the head of your team, you need to ensure that you provide your team with the right strategy and encouragement to accomplish company KPI objectives at optimum efficiency. Spread your business vision clearly and establish small goals to ensure that they are aligned with the required business objectives. In fact, your employees should also share some useful advice and information about rescuing your sinking business.
5. Reduce Costs and Manage Cash Flow
You will probably need to minimize your expenses if you want to keep your business stable. Get rid of all unnecessary and discretionary costs, such as a corporate holiday party or a weekend gathering. After this, try to lower the cost of non-people as much as you can. For example, see if the landlord is willing to decrease the rent for some time or how you can reduce the utilities.
If your corporation isn’t doing so well, you should also have to make a tough decision to fire people or reduce their compensation. While austerity policies can be quite tricky, it may work better to keep a few people employed than to have the entire team leave their jobs when the business shuts down. Or even better to find the best way to communicate honestly and authentically with your team, share your company’s financial situation and ask their cooperation, teamwork, and understanding of compensation reduction and keep the whole team together. Be careful how you share the situation with your team, you want them to be motivated and be together as a team.
At the same time, you have to monitor cash flows every week, that you can certainly move to a monthly basis once your business becomes stable. Closely monitor your working capital and give priority to converting debts into cash flows. Converse any delay in payments to the creditors and build an appropriate plan to get advance compensation from your debtors and follow up with slow-paying clients.
At ZAD Consulting Group we will review your Business Health and as with any operational issue, we tackle one problem at a time. We will clearly show you how changing one particular issue can improve operations and, ultimately, profits and profitability.
Author : Arash Zad