One of the challenges of putting together our video blogs is being timely with what we cover. You’ve probably noticed that over the time you’ve watched our videos our subjects mostly cover things that could have happened yesterday or ten years ago, or for that matter ten years from now.
Today, I’m breaking with that practice and am going to give you some of my best thoughts on how to manage disaster planning in the age of the coronavirus, or as this strain is called covid-19.
One of the challenges with putting together a video blog is being timely with what we cover. You’ve probably noticed that over time that you’ve watched our videos, the subjects mostly cover things you could have happened yesterday, or 10 years ago, or for that matter, 10 years from now.
Now today I’m breaking with that practice, and I’m gonna give you some of my best thoughts on how to manage disaster planning in the age of the coronavirus, or as the strain is called, COVID-19.
So let’s jump right in.
- Number one, set up a system to talk with your employees and key customers through video chats. Now we use Zoom for this because it’s easy to use. It’s become pretty much ubiquitous, meaning that everybody has used it or knows how to use it. It’s also really easy to use. It allows us to have conversations with multiple people at once, so it can do a group chat, not just a one-on-one chat. Now some people use Skype. Some people use GoToMeeting. There’s plenty of platforms out there to choose from, but because you can’t go into work and you can’t be in the same place of people, the first thing we need to be doing is we need to be setting up a good system of communication, and video chats are really a good way to do that. We’ve been doing it for years and years and years, and I have found it a really effective way to talk to people when I can’t be in the same room with them.
- So number two actually could be number one on the list and probably should be number one on the list because if you don’t do this there’s a chance you’re not gonna be in business for a very long period of time. And that’s to do some scenario planning. Now I talk about scenario planning a lot. In fact, my last couple of newsletters have dealt with the topic of scenario planning. But here’s what you wanna do when you’re doing scenario planning.
- Number one, plan for how long your cash is gonna last. This includes your lines of credit. And what I mean by how long your cash is gonna last is you basically do a sources and use of cash, not a profit and loss statement, but where’s your money gonna come from? And where’s your money gonna flow to? And at the end of 30 days, do you have a positive balance or a negative balance? And you’re most likely right now gonna have a negative balance.
- So if you do have a negative balance, what are you gonna do to make sure that negative balance becomes a positive balance? Now if you’ve done what we’ve suggested, which is you have an emergency fund, this is the time you get get to dip into your emergency fund. But for most of us, we don’t have an emergency fund, so we have to go someplace else. And this is where a line of credit can come in usefully. Now there are some plans that the government has. They’re gonna inject cash into our businesses, but the sad thing about that is I don’t think it’s gonna be really fast. In fact, it’s probably gonna be weeks or maybe a month before we even see some of that cash. So when you find out that you have a negative situation, or you might have a negative situation, what can you do to quickly reduce your costs?
- Now one of the ways you can do that is you can get rid of non-essential employees. Now I know that all your employees are essential, and you need to have them working with you all the time, but the truth is, as your business goes down, some of those people are not gonna be essential to make sure you keep your business running at some level. Now what you do have to be thinking about is at some point this thing is gonna end, and we’re gonna go back to doing business again, and who are the people that we need to have to get our business up and running and moving again? Now those become essential employees because you’re really gonna need them as we go through this.
- So here’s another thing you’re gonna find, that even after you chop away, and you chop away, and we ask some of our non-essential employees to leave the company, go on furloughs, or just lay them off, there’s a good chance we’re still gonna have negative cash flow. Now when this happens what you need to do is you need to start getting tough. You need to start saying, “Who can I pay? “Who can I delay? “And how should I go about it?” Now if you’re going to delay or you can’t pay people, you need to be calling them and be proactive to let them know what’s going on. I will tell you from a fact, if people don’t pay me, and they don’t talk to me about not paying me, I get really annoyed, and I can promise you your suppliers are gonna be the same way that I am.
- So I want you to do this for this cash flow planning for 30, 60, and 90 days out. The truth is, I think this is gonna go for another 60 days and we really need to be aware that we’re not gonna have our business even close to bein’ open, probably till some time in May, and I’m not even sure about that.
- Now the third thing you need to really understand is the difference between profit and cash flow. Now I’ve talked about this a fair amount that you could be making money on a profit and loss statement but be bleeding cash at the same time. Now we’re gonna do a future video about this, but for right now, just understand that just because you have a profit on your profit and loss statement, that’s not a cash flow analysis, and that’s not gonna tell your cash over the next 30, 60, 90 days. Now I already mentioned this, but I wanted to mention it again because it’s a really big deal.
- If you have a problem paying bills, you must be proactive about this. Now what does proactive mean? It means you call your suppliers, you say, “Look, I just don’t have the money to pay you,” or, “I’m just not going to have the money to pay you.” Even better yet, “We need to work out a payment plan “of some sort, because this is gonna end, “and we’re gonna come back again, “and we’re gonna come back stronger than ever.” But make sure you have a plan, and once you have a plan, make sure you can stick to that plan.
- Number five, and this is a big one is, you really need to work on a plan about how to get your business open again once things end. And they will end. And we will go back to having some level of normality, but you’re gonna really need to work on a plan about how to get your business open and running again.
- You might have employees who are left and gone someplace else.
- Your customers probably aren’t gonna be used to using you because they’ve found other places to get stuff they needed because they couldn’t walk in your store.
- If possible, I want you to create some buzz about reopening when it happens. Do anything you can on social media. Call your customers. Let ’em know you’re coming back. And by the way, have some regular communications with your customers while this is going on. Let ’em know what’s going on with you, what’s going on with your business, and hopefully find out what’s going on with their business or with their life, so when this happens, and it ends, they’ll come back again.
- Now number six is, and I’ve been talkin’ about this through this video already, is over-communicate. Over-communicate with all your stakeholders. Over-communicate with your employees, your customers, and your suppliers. The more you communicate, the better chance people are gonna know where you are, and where you’re coming from, and how that can benefit you.
- And once again, remember scenario planning. If you don’t know how to do it, get some help.
Now I know you’re probably getting all sorts of advice, not only about your business, but keeping yourself healthy and safe. Your focus needs to be on healthy and safe first, and your business next, because if you’re not healthy you won’t be any good to your business, any good to your customers, or any good to the community and your employees.
So stay healthy. Work on your cash flow. Think about what’s gonna happen afterwards. And make plans to get there.
This is Josh Patrick. You’re at the Sustainable Business. Thanks a lot for stopping by. I hope to see you back here really soon.