What do you do as a business owner to protect your financial health, team and reputation

What should Small Business Owners do to weather the effects of COVID 19?

It’s a tough moment for SMEs in countries affected by COVID 19, with a myriad of uncertainties stemming from information overload, fake news, countless speculations and Government Lockdowns creating a multi-sector impact which affects everyone.

As a business owner, you know that protecting your reputation is as important as ever and whether you do this yourself or you use an online reputation service to do it, you have to be on top of it to ensure that you are doing well.

The question is what do you do as a business owner to prepare?

This blog series will firstly explore some rules of thumb to follow during times of crisis, then specific steps to protect your financial health, team and reputation.

We will structure this first blog post with Jack Welch’s famous words on 3 things a manager needs to focus on:

1. Cashflow

2. Staff Satsifaction

3. Customer Satisfation

Cashflow

If you haven’t got visibility over your cash then now is a great time to start! If you’re in retail or F&B you might have already begun seeing your sales take a nose-dive. This gives you 2 things to do:

1. Save your top line (Revenue): Such as exploring delivery, Ecommerce and other activities that help you sell more to the same people, or sell the same service/product to different people. (More covered below)

2. Decrease your bottom line (expenses): Pay cuts, negotiations with suppliers, your landlord etc.

No one knows for sure when bans and lockdowns will be lifted and when business starts to normalize, so a prudent measure is to ensure enough cash reserves for 1 quarter (3 months) for all your expenses, and if this is not possible, then ensure your cashflow is able to cover all your most important expenses for the next 3 months. (Yes this means your staff!)

And be prepared for your revenues to drop up to 75% or more. This means many tough conversations with suppliers and negotiations with your customers; which leads us to the one of the highest costs in your business, your team.

Staff Satisfaction

There is no easy way to say this but it is a difficult time to be in the job market with hiring freezes and company closures, thus it’s better for your team members to receive a reduced pay than to not have a job at all.

But this does not give you an excuse to simply cut pay and make a huge return for yourself. We recommend running a Strategic Performance Review where you align your company strategic goals with staff KPIs to see the following:

1. Who is revenue generating?

2. Who is helping the company get to where it needs to be?

3. Who is performing well?

4. Who has a family and is in need of the cash?

We highly recommend budget cuts by total percentage decreases first, then calculating different percentage decreases per team member based on their Performance Review to reach that total percentage mark.

Here’s an example: 30% cuts off payroll from $10,000 to $7,000. We now know we need to reduce total payroll by $3,000 and have run our Performance Review to find out who has been performing and who needs the money desperately. Based on that information, we have decided to reduce $1.5k total from managers, $1k total from executives and $500 from rank & file salaries totaling $3k in reductions to reach that $7,000 mark.

REMEMBER: It is better to treat people FAIRLY, not equally. If you deducted 30% flat from everyone’s salaries you will marginalize the ones who really need the money and not account for those who are able to take the cut or are not performing. We recommend to spend the time to review each team member in accordance to company strategy and performance. This is an opportunity to show your team what it means to be human and for them to show their loyalty to your leadership and your firm. You may be surprised at how an honest conversation with a manager may lead to a voluntary cut of $30 from their $1,500 salary for the cleaner to not receive a $30 cut from their $130 salary.

If you’re confused about this then send us a message for guidance.

If you disagree with pay cuts and prefer not to stress and just fire everyone then bear in mind that you still need someone to keep your customer base engaged and loyal throughout this period so you can invite them back to your business when Covid is over!

To mitigate dissent and fear of budget cuts, remember to practice empathy and compassion, take the time to listen to your team members and be considerate of how this is affecting them. School closures and panic in supermarkets will require extra time to look after families.

Customer Satisfaction

Your customers are just like everybody else and they’re all feeling the same thing. Fear.

They’re looking for brands and companies which are reliable, responsive and consistent that can act with integrity during moments of crisis. This is a defining moment for many brands to be seen as sly opportunists or strong operators. We highly recommend the latter.

To save or increase your top line, you’ll need to focus on these 3 things:

1. Loyalty Schemes - Rewarding your customers with discounted rates for purchase or points for continued business (Click here for some great ideas)

2. Digital/eCommerce -People still need necessities and all kinds of things for daily living or for the sake of feeling ‘normal’. Invest in a good website, content plan and blast it on social media! But word of warning: Work on your branding to cut through the noise, as many other businesses will now focus on digital marketing to make up for foot traffic in stores.

3. Clear and Responsible Communication - Check the quality of your information sources! Reputable news outlets generally value Accuracy over Timeliness and will double check their source information before release. If you’re spreading news and information regarding Covid 19 or about your promotions and events, do put it through a ‘Is this a good idea’ filter before publishing. Your customers would value a good voice of reason.

Conclusion

This first entry should provide some good first steps for your organization, so remember to stay calm, practice good hygiene and lead your organization with empathy and compassion, this moment in time is when we need it more than ever.

For vetted information on COVID 19 and how to practice social distancing (which we will cover more of soon), please visit Flatten the Curve for more information.

Was there something not covered or you have a burning question? Feel free to comment or send us a direct message for some consultation for your organization on dealing with crises or COVID 19, we’re ready to help!