Create a strategy to mitigate the impact of COVID-19 on your business
by Tom Wright, on Mar 19, 2020 8:34:59 PM
104. That's the number of COVID-19 / Coronavirus related emails I've received from companies giving me updates on their stance and preparedness for this unprecedented global event. I don't mind receiving them, and some of them contain genuinely useful information. But the content of 90% of them is pretty much identical. Businesses are preparing by increasing hygiene, implementing work-at-home policies and in some cases, relaxing terms and conditions for their customers.
In this post, I want to have a go at giving you a more detailed framework for how you can mitigate against the economic impacts of this situation. This will be reflective of many of the things we're doing here at Cascade, but I've also tried to generalize the advice to make it applicable to as many people as possible. Everyone's situation will be different, and I know that this post won't be applicable to all, but I hope it will help a few people to at least better frame their thoughts on how to tackle this problem.
You need a COVID-19 strategy
I think that people have realized that the virus is going to have a negative impact on the vast majority of organizations. Smaller to medium-sized business will as usual feel the pain faster and harder than larger ones. But larger businesses arguably have more opportunities to mitigate due to the diversity of their resources, so a strategy for them too is equally important.
For clarity, let me just say that in this article I won't be covering basic strategies like:
- Improved hygiene to protect your employees
- Effective work-from-home processes
- Basic customer communication strategies
Whilst incredibly important, I think that pretty much all organizations have gotten their heads around these things by now (if not, do that first, then come back here!)
The way that you go about creating your own COVID-19 strategy should be pretty similar to how you would any other strategy. That is that you should following a simple Strategy Model that includes at least the Objectives (outcomes) that you want to achieve, supported by the Projects (actions) you'll be implementing to get there and the KPIs (measures) that you're trying to positively impact.
Obviously, you'll need some kind of system to track your strategy and bring it to life. If you already have a Cascade subscription, great - if not, we're offering anyone who needs it 3 months of completely free access to our Starter plan to help you through this challenging period. More details on that here.
If you don't want to use strategy software, you can at least make a start in good-old-fashioned Excel. Either way, do not make the mistake of keeping your COVID-19 plan to yourself. Involve as many people as possible, as soon as possible.
Focus Areas to mitigate your business against COVID-19
A quick note, I'm only addressing the economic impacts of the virus in this post, not the health impacts. Every business needs to have a health-related element to their strategic plan, but that's really not for me to comment on since the situation is different for everyone.
I've picked out 3 Focus Areas that I think are helpful in the preparation of your strategy:
- Right-size the business
- Reposition your product
- Redesign your marketing & sales funnels
I personally believe that the impacts of COVID-19 on the business world will be far longer lasting that most people currently assume. But funnily enough, not necessarily in a bad way. A lot of the Projects that you'll probably implement as part of your COVID-19 strategy are probably things you should have been doing anyway. A solid strategy now could actually move your business forward in the medium-long term rather than simply setting it back by the value of the sales you will likely lose over the next few months.
Let's take a look at the specific Focus Areas that I think you should be planning around:
Focus Area #1 - Right-size the business
Let's not beat around the bush here, COVID-19 is going to suck. Sales will go down in line with market confidence, and you need to ensure that your cost structure is set up appropriately to offset this. This first Focus Area is frankly about survival, and there are going to be some really difficult decisions to be made to set up your business to weather this storm. Worst of all, you cannot hesitate in making these decisions - you need to trust your gut and take steps to cut costs where needed pretty much immediately.
Here are some of the strategies that you might want to implement in this Focus Area:
- Review and make adjustments to sales headcount Project
- Review and make adjustments to support headcount Project
- Review and make adjustments to marketing headcount Project
- Reduce overall wage costs by 15% KPI
I wanted to get this one of the way quickly. Reducing head-count is one of the hardest and most unpleasant things you have to do in business. But your ability to make fast decisions now about people who either aren't pulling their weight, or who won't be able to pull their weight in the near future (due to the virus), will actually protect the majority of your people in the medium to long term. I'm absolutely not advocating the use of COVID-19 as an excuse to make headcount reduction, but if there was ever a time to be decisive about right-sizing your business, it's right now.
Right-sizing your business isn't just about headcount though, there are other ways to reduce costs without hurting your opportunities to grow:
- Reduce non essential software subscription costs Project
- Change annual subscriptions to monthly if renewing soon Project
- Reduce office costs (e.g. staff kitchen) to minimum levels Project
- Achieve cost savings of $10,000 per month KPI
There are lots of ways to save costs in your business. But don't forget that cost saving isn't the only thing you want to achieve. You also want to start thinking about minimizing your cash flow outgoings over the next few months, even if in the long term that means spending more money. When it comes to survival, cash is usually king!
Our final set of goals when it comes to right-sizing involve ensuring that you've minimized the amount of account receivables owed to you. After all, you won't be the only one trying to reduce costs, your customers might be too.
- Create an accelerated A/R process for debts Project
- Create an incentive program for early payments Project
- Reinforce the value-proposition of product to all customers Project
- Reduce outstanding debts to less than $100,000 KPI
Focus Area #2 - Reposition your product
In the Focus Area above, I talked about reducing costs to a minimum. Inevitably, that means reducing spend on anything that could be considered a luxury or even a non-necessity. The flip-side of organizations following that advice, is that your product or service could fall into that luxury or non-necessity category, unless you do something about it.
This will of course apply different to different businesses. Toilet-paper companies are sitting pretty at the moment as you've no-doubt read in the news. Whereas fine-dining restaurants are absolutely ****ing themselves (and with the toilet paper situation as it is, that's an even bigger problem than usual).
So the question is, where does your product or service fall on the necessity -> luxury scale? Here are a few strategies that you can implement:
- Determine current perception of our product/service Project
- Decide on which elements can be repositioned as 'necessity' Project
- Implement revised marketing in all key channels Project
- Maintain website / foot traffic 100% KPI
I've seen some great examples of this recently. For some organizations like remote working tools such as Slack and Zoom - it's a piece of cake. But I've also been impressed by the revised marketing I've seen from my local sports-massage studio ('Get your body in prime condition to tackle the hurdles of the days we now live in'), Uber-Eats ('Don't stockpile, just order-in') and others.
Be careful not to just focus on new customers though, you've got existing customers that you also need to persuade of your value in these difficult times:
- Send customer comms describing how product helps in current situation Project
- Offer extensions / bonus features to help them even more Project
- Offer targeted support on how to use our product in most effectives way Project
- Maintain customer usage levels at 65% KPI
You're going to have to go above and beyond in ensuring that customers remain engaged in your product / service. That might mean accepting lower margins and giving away features or extras that would normally be reserved for higher paying customers. Not only do these kinds of projects help you to retain customers, they also help your fellow businesses and people to get through this difficult time. Here at Cascade, we'll be offering customers free workshops to help them plan their own COVID-19 strategies.
Focus Area #3 - Redesign your marketing and sales funnels
Our world will be changed by this event. Some businesses will fail, some will survive but may never be the same. Others will survive, consolidate and then flourish - perhaps be even stronger than they were before. One of the biggest changes that I think will never be reversed, is the accelerated shift to digital interactions that this virus has forced us into. That covers everything from how people shop (online delivery networks will be strengthened and will likely remain that way), to the way people interact with healthcare (doctors are now tele-doctors, and that will probably also continue even after the virus situation abates).
The way that your future buyers and customers interact with your business will never be the same again. For some businesses, that's not a major shift. SaaS software providers like us are already almost entirely online businesses, with face-to-face interactions mostly limited to conferences and high-value accounts. But for some businesses, the shock of this change to faceless interaction will be massive. Physical commerce as always comes to mind, but this change will also affect entertainment (streaming services up, cinemas down), consulting services (old-school accountants have started embracing Zoom).
How are you positioned for this change? Here are some strategies you might want to consider:
- Benchmark our current digital marketing KPIs Project
- Identify best-practices in digital marketing for our industry Project
- Hire a digital marketing expert Project
- Increase digital marketing leads by 50% KPI
Even if you think you're in a good spot regarding digital marketing, remember that your competitors will all be massively raising their game in this regard too. We talked a lot about right-sizing your business and reducing costs, but this is one area where additional investment is almost certainly prudent. If in doubt, start by hiring an expert in this space, even in a temporary capacity to help you get started.
Digital marketing is just one piece of the equation though. How about:
- Equip sales teams with tools, materials and content to succeed Project
- Adjust pricing to accommodate businesses / people with cash-flow issues Project
- Implement sales strategies to businesses / people who are less impacted Project
- Maintain sales volumes at 80% KPI
You need to get creative in how you sell your product, and accept that your customers won't be willing / able to shell out a huge amount of money upfront. Flexibility in your business model could be the difference between survival and failure.
The next 6 months will be hard for everyone - but could also be the best thing that ever happens to your business
I want to finish on a note of genuine positivity. As the CEO of Cascade, I've been through the same emotional rollercoaster as almost everyone else has over the past few weeks. There have been times when I was complacent, and times when I was naive.
But right now, I'm feeling only two things regarding this situation. Resolute, and.....positive.
You may well wonder how I can say that right now, at the same time as outlining the measures above - some of which are drastic, all of which are hard. But the thing is, so much of the strategy I've suggested above, is stuff that we (and maybe you) should have been doing ages ago anyway! The virus has taken away any excuses, any ambiguity and any room for delay. We (and you) have to make our business stronger, whatever that entails. And when this situation starts to normalize, I can't wait to unveil the new Cascade 2.0. Battle-weary, but still smiling 😁