NOBODY IS PREPARED FOR A CRISIS, NOR IS THERE A READY SCRIPT, EACH CRISIS HAS ITS PARTICULARITIES AND GROWTH HORIZON AND END.
Every day, our decisions impact the lives of people, employees, family members and partners. In recent weeks, this impact has been exponential.
In this article, we separate some recommended actions to help entrepreneurs overcome the crisis and make decisions on the fly without compromising the future.
- Involve the leaders and be transparent with the cash situation, defining what actions will be taken and the period for new evaluations and important decisions.
- Identify 4 or 5 major projects that will be broken down into action plans with weekly follow-up by the board and management, and make each director responsible for one of them.
- Make a canvas with a pessimistic, moderate and optimistic scenario assuming a drastic drop in revenue that helps to visualize all possible scenarios.
- Choose the vital metrics to track: future cash flow, sales, customer retention, and contribution margin. And monitor daily.
- Start cutting expenses with administrative expenses: travel, corporate cards, miscellaneous expenses, and non-essential tools.
- Focus on the core business of your business that is already validated and profitable. At that moment, cut investment in new products that do not generate return in the short term. Keeping a customer is easier than acquiring another. Look for ways to engage the active customer base.
- Also renegotiate the flow of supplier payments. Try to match these dates with your receivables flow.
- Seek to renegotiate grace periods and fees with banks, but avoid harming your credit analysis – they will be your main creditors in the coming months. Don’t turn a cash crunch into a credit crunch.
- If you already have pre-approved short-term credit lines, take some of them. Stay tuned: the cost of debt is higher and the requirement for guarantees is higher. There is a bottleneck in credit analysis, which has delayed loan approval, seek government incentives.
- It is also worth mentioning the great importance of investing in digital marketing in times of crisis, your product or service can sell itself, without spending on resources such as travel, meals and hotel rates. In addition, people in quarantine are constantly on social media and accessing their emails, which contributes a lot to growth. Doing nothing could lead your brand to oblivion, further aggravating the crisis.