2020 is turning out to be a very difficult economic year. Next year may be worse.
Experts indicate that pre-Covid19 economic and social behavior will likely only return when there is a strong vaccine made available worldwide.
So, what does this mean for you? If you are a business owner, executive or even an individual proprietor, you should start thinking about how your business might be done differently when we emerge from isolation.
First, we suggest you examine your business enterprise to understand your strengths and areas for improvement. Particularly, understand your competitive advantage in product or service.
Second, you must conceptualize how or what you must do differently to engage a new social behavior paradigm. People, and the businesses they serve, will act differently when we emerge. How will you play into that new way?
Third, you need to be more efficient and more relevant than you were before. This is because the economy will be smaller when we emerge. A smaller economy translates into less spending capability and/or market appetite for what you do or produce.
On the opportunity side, new behaviors drive new products and new markets. But remember, different behavior may also destroy or materially affect the old market.
Reinvention of what you do or produce, at the outset of a changed paradigm, will likely help you expand and excel against competition.
In fast-changing environments, you need to be nimble and do things better and faster. You need to be more accurate. You need to do more with less capital. You can do this by maintaining timely and accurate financial reports. You can do this by being creative and forward thinking.
Understand your revenue sources and timing. Likewise, you need to have detailed understanding of your expenses. You must determine absolute priorities and husband your remaining capital resources so that you can invest in what your business will become.
Identify the essential components of your enterprise. Who are your best and brightest employees? If the shutdown is now forcing your enterprise into suspended animation, think about preserving the essential components to reactivate it. Importantly, think about preserving what you will need to carry out your enterprise, once retooled to meet the new paradigm, as opposed to just lighting up the old.
Reimagine your business, what will it need to be when the time comes to reopen and enter the brand-new world of modified social distancing. How will your business enterprise be different? How will you be able to tweak what you were doing well to better meet the new future way of doing things?
If, like many, you are completely shut down, seriously consider whether you will have a viable enterprise in the new paradigm. If not, you should figure out how to shut your doors permanently and recover as much capital as possible so that you can redeploy it in a new paradigm focused enterprise.
It is likely that you do not yet know whether your business will remain viable. That is why suspended animation may be the appropriate time to figure out your future course.
For instance, if you are in the restaurant business, you can easily imagine that table space between customers will be much different than pre-pandemic times. This will tie into space needs and cost and how customer engagement occurs.
If your business thrives only with large crowds, or if it depends on close human proximity, new protocols will be necessary for your business to survive.
How do you preserve your enterprise? All enterprises depend on relationships. The essence of any business enterprise is its relations with customers, suppliers and employees. Social separation has had dramatic effect on an economy that relies on the opposite, connecting people together. Connectivity will still occur, it will just be done with more physical separation for some time.
The best way to preserve relationships and foster connectivity will be communication and even more communication. As we have all learned, we can still effectively communicate via technology. It’s not the same as person-to-person, but it works.
Avoid disrupting the relationships that you have spent years consolidating by failing to communicate. Perform forward thinking on how you might bring your relationships into your ideas about doing things differently.
Don’t perform suspensions or terminations based purely on lack of immediate liquidity. Understand, or find someone that does, all resources being made available to preserve your enterprise. Federal benefits, loans, and other pending legislative programs provide many alternative financial resources.
Think about your options.
Is employee retention appropriate?
Is it possible to furlough?
Is it possible to reduce hours to preserve employee relationships?
Be prepared to invest additional capital into your enterprise. Capital can come from savings, or even additional investment from others. Take advantage of resources now being made available to meet this crisis but do so in a smart future thinking way.
The world order and the business principles historically in play will return. However, we will now do things much differently than before. Be on the front end of that, and you and your relationships will likely prosper as never before.
John Morrell is Chairman Emeritus at Higgs Fletcher & Mack. He has extensive business experience and has practiced in business reorganization and bankruptcy law since 1984. He now holds senior status and serves in the firm’s Creditor Rights Business Reorganization and Insolvency Practice Group.