Step 1. Cockroach mode.
Tighten the belt. Look at all your expenses. Look at inventory for operational savings. Understand your business’s fixed costs and assets. Most importantly, focus on the core, cut the fluff. Pause unnecessary expenses.
This is the most difficult step for many businesses. I’ve been in a position where you have to make hard decisions, and it’s incredibly stressful and difficult. If you have a leadership team, working through the decisions and things that need to be done can make for a much stronger team on the other side but it doesn’t make it any easier.
Step 2. Re-think your business.
Does your business still make sense for the next six months, 12 months? Is the product you’ve been offering, something that people will continue to want? Figure out your one week plan, your 1 month plan and your 6 month plan. You have one week to implement your 1 month plan and then you’ll have 1 month to implement your 6 month plan.
What assumptions still make sense and what things need to be re-thought?
Step 3. Move more into Needs, rather than Wants.
If you’re stuck on your 6 month plan, consider how you can move up the need pyramid. Companies that suffer the most during a recession are things you Want, not things you need. If you’re providing things that people Need, they will continue to need them.
Step 4. Renegotiate.
You have your plan, now you need to renegotiate. Rent, debt, payables, and receivables. Your business partners will be doing the same with you, so look for mutual wins. (you want 4 months of free rent, your landlord may want a lease extension, see if you can come to a win-win.
Don’t slash your prices. Don’t race to the bottom. As an example airlines are slashing prices but you can’t stimulate demand by doing this. If you slash prices so will your competitors and this can be a death spiral. If there is less demand, you should try to lower your supply and inventory.
You won’t be able to stimulate demand with lower prices and you’re unlikely to get yourself out of a hole this way.
Step 5. 🙂
Step 6. Be Seen.
Be in front of your customers, shift your brand and your perception. We’ve seen large brands like Zappos, New Balance, Love Pop and others doing this, but it’s not just for larger companies. Smaller companies can step up their visibility in both community and perception. Being seen will help you stay top-of-mind.
Step 7. Pivot.
Some businesses are moving their entire business online, we’ve seen this with classes and training and retail moving to e-commerce. Restaurants are pivoting to curbside pickup.
Some pivots are harder and travel and venue-based businesses may have to hibernate the core business while experimenting with larger pivots.
The most important thing for business owners is to get out of cockroach mode and focus on delivering value. Don’t get trapped in staying busy, checking emails, and following the patterns of business as usual. Now is the time to make a plan, pivot and drive long-term value creation.