There are five things companies must do right now in order to survive the Covid-19 crisis:
- Plan to survive and commit to taking the action necessary to weather the storm and position for renewed growth. Trade reduced margins for improved cash flow. Your detailed plan which honestly lays out the worst case, and firm actions planned and taken, will help you keep the confidence of staff, shareholders and potential lenders.
- Customer confidence is key. Get close to top 20% of (80 20) of customers and implement enhanced proactive service. Show them you care by being interested in their challenges and offering practical support and solutions. Identify and address high-risk accounts, if necessary by stopping supply. Consider adjusting pricing terms in specific cases in return for earlier payment.
- Suppliers want to stay in business too - reach out to your main suppliers (80- 20 again). Be honest about your own challenges and show what you are doing to survive. Plan with them for a shared future which includes extended payment terms from them, and price concessions for you. Cash flow may mean more than margin, so do the math.
- OPEX – aggressively cut costs to a survivable worst-case level – shed discretionary spend, trim travel. If after all these measures you are still at risk then consider your borrowing options. Your detailed plan will help. Reduce headcount early, do not delay. Who can best help you hang on to customers now and who will be critical to your future once growth returns? Act quickly to shed PT, non -essential staff. Ask those you retain to take on more. You are in it together.
- Communicate clearly and frequently with your team and other stakeholders using virtual tools. Encourage engagement and feedback, use time saved from travel for training and team building, to show you are building for the future. Tell them the truth.
Covid-19 crisis may be plateauing in Singapore, China and South Korea, but the Singapore government is now calling for more stringent social distancing, which is likely to impact business further. And it is only just getting started in Europe and the US. For an open economy like Singapore, the ripples of this global turbulence will be felt in Singapore for months to come.
The time to make lasting, positive changes is now. Seize the opportunity in the crisis.