Crises reorder priorities. As we reel from the commercial reverberations of COVID-19, it is clear that money – cash flow, specifically – is a leading priority for businesses. However, a company’s long-term branding may suffer if it fails to balance entrepreneurism with its core values.
Tough Assessments
Geographical isolation is meaningless in the interconnected and interdependent ecosystem of world business. Consequently, the current climate of uncertainty has negative financial implications for every link in every international supply chain. Businesses are besieged by competing push and pull factors, with payments to suppliers precariously balanced against expenses and staff salaries.
To weather the storm, begin by assessing your financial standing. Use metrics from currently suppressed demand to accurately project your cash inflow for the coming months. Revisit and reevaluate your variable expenses. Hiring freezes are virtually de rigueur but you could also suspend discretionary expenditure like training.
Factor in your fixed expenses to estimate your cash flow buffer. That should be the starting point for all money-related considerations in managing this crisis.
Next, look outward to the individuals and businesses to whom your financial wagon is hitched. Identify suppliers and clients that may be at increased financial risk. Do not necessarily jettison them but do gauge their feasibility as partners and your continued dependence on them.
Will you cease deliveries to a longtime client who is already struggling to pay you? Will you continue to source from a financially-stressed but critical supplier or seek unproven alternatives? Your answers to these difficult questions must embody both your fiduciary responsibilities and your core values.
Soft Solutions
We are in the midst of a truly unprecedented situation and the Unknown is intimidating. The best advice to navigate uncharted waters is stick to what you know works. Give your employees, suppliers, and clients the stoic semblance of normalcy they need to persevere.
This does not, however, mean sticking your head in the sand. Be open with your staff when you apprise them of the company’s position. Most will willingly make short-term sacrifices for long-term viability.
Extend that candidness to your suppliers and clients because their reciprocity will allow you to make more accurate assessments yourself. If possible, use conference calls where various stakeholders in the chain can apprise everyone else of their respective capacity and limitations.
Authenticity coupled with fraternity is essential at this critical juncture. Espousing the values that you have championed may not be as easy when margins are tight. Keep in mind that cash flow can only happen when everyone does their part to keep it flowing.
One Family
Virtually every business occupies a spot somewhere in the middle of the supply chain, dependent on suppliers and relied on by customers. As you make decisions in this trying period, remember that others are making similar decisions about your business.
Please contact me today if you have any questions about navigating today’s business environment.
