But what can individual businesses do themselves? How can they survive the acute shock? Reshape their business for the year ahead? Manage unexpected surges in demand? Make sure they are one of those businesses that earn support? And flourish on the other side.
Dr Jana Matthews is the ANZ Chair in Business Growth at UniSA and leader of the ANZ Business Growth Program. The program is delivered by The Australian Centre for Business Growth at the University of SA and focusses on small to medium-sized business.
Dr Matthews says one big lesson is to know whether the light that is blinking at you is red, yellow or green - each of which requires a different response from CEOs.
You can hear more of our conversation in the podcast above. Or read her insights below.
Red light - DANGER
Four categories of business right now are in the danger zone – travel, arts, restaurants/cafes and leisure/sports - because they are associated with places or events where people congregate – which is now prohibited. But even before that, many people were choosing not to travel or eat out or go to events.
As harsh as this may sound, the best strategy may be to pay your employees their entitlements and close the business – at least for now. If you rent, negotiate with your landlord. If you own the building, banks in many countries have now agreed to provide some relief on mortgage and interest payments, so call your banker ASAP. There’s also some government assistance for businesses and employees.
Take a hard look at your business and be honest about what will be required for it to be viable. Are you willing and able to make the changes required for it to re-open and start again? If not, then give yourself permission to close it down and think about what you want to do with the rest of your life.
If the business is viable, then use these next few months to plan a “do-over” for the company. Look at your products and services, study your customers, reconsider your marketing strategy and perhaps refresh your website. Stay positive and consider this hiatus a gift of time to make positive changes.
Yellow light - CAUTION
A lot of companies are looking at a yellow light. As the leader you need to take this crisis seriously and not think “she’ll be alright” or look the other way in “benign neglect”. Lack of attention could be fatal if the light turns red.
Begin with your financials. Study your accounts receivable, payable, profit and loss, and balance sheet. Project your cash flow for the next few months. How long before you run out of money and can’t pay staff and other expenses? Work on collecting receivables and think through how many expenditures you can delay.
Focus your efforts on selling what customers want and stop trying to sell the rest. Figure out how to make more of what customers want - put on a second or third shift or be willing to pay overtime. Stop selling to customers who cost you money.
Be honest with your employees. If you are over-staffed for the current volume of work, engage with them to come up with some solutions, such as taking vacation, reduced shifts or job-share.
Green light - GO FASTER
It may surprise you, but there are a fair number of companies seeing a green light signaling “go faster”. They are actually benefitting from this crisis.
Construction is still proceeding, ventilators are in high demand, we’ve run out of face masks. Hospitals need more staff, gowns and gloves. Some distillers have switched from making spirits to making hand sanitiser.
You could call these businesses “lucky” but I would call them smart and doing what they should do at all times - and especially when a crisis offers an opportunity to grow.