The past year taught us how essential it is to plan for the unknown. With almost two years down, the COVID situation seems like it is here to stay. While the economy is opening up, we should still practice reasonable caution. Here are a few lessons to take forward from last year.
Once things start slowing down there is no point in waiting. The plan needs to be made in advance. Divide your plan into phases that mirror the potential phases of a downturn. To start with here are a few things you can add to your plan.
-Rank your employees based on utility (most essential to least)
-Have a compensation reduction plan (decide an apt percentage reduction)
-Cut down on non-essential spending
Reach out to customers
Be transparent about downsizing or significant organizational changes to your customers. The ones who may be the most impacted should be reached out to on a personal level. Communicate proactively during these times. This way you can ensure that the customers understand you and don't leave right away. Solidify your relationship with them during the tough times.
Communicate to employees
They are one of the most important parts of your organization. There is no doubt that they will be nervous. Clear and honest communication is your best bet during this time. Even if you have to convey something unpleasant, ensure that you don't keep them in the dark and can support them in whichever way possible.
Take quick initiatives
During a downturn, conserving cash should become your priority. Don't just keep thinking, act on your plan and do so quickly. Figure out what you can do to bulk the cash portion in your balance sheet. Hiring freeze, cutting down non-essential expenditure, letting go of non-performing team members, etc all can help.
Skip the rigidity
Keeping a plan while staying flexible will be your biggest ammo. You may have to make tough decisions but don't be rigid about following your plan. The more flexible you are, the better you can get through such uncertain situations. Stay informed and stay open-minded.
Let's keep in mind that the economy is always cyclical. Your planning can help you persevere better when times get tough. At Greyleaf, our team is always available for its clients and partners. Your dedicated finance tracker is just a click away. We are here to see you succeed and add value to your business. If business planning is an area you're struggling with, hop on a call today, and let's fix this together.
Until then happy business :)
Quick Note: This article is provided for informational purposes only, and is not legal, financial, accounting, or tax advice. You should consult appropriate professionals for advice on your specific situation.