“Last Call: Caldwell Orders Bars, Restaurants To Restrict Service Starting Friday” – Civil Beat, Mar 17
“Gov. David Ige calls for tourism halt for 30 days amid coronavirus pandemic” – Star Advertiser, Mar 18
These recent measures by Hawaii state may delay or limit the humanitarian crisis caused by COVID-19, but they make it abundantly clear that our actions to contain the virus will themselves cause massive business disruptions. And then, there is the imminent risk from virus spread in our communities.
For the Hawaii CEO, a “wing it” approach has zero chance of success. This crisis calls for business leaders to take deliberate, bold and swift actions.
We recommend the CEO take a 3-pronged approach (we will update our thoughts here, if new information necessitates that).
A. Financial Plan
- Plan for
sixtwelve months of depressed revenues. Build a quick-and-dirty revenue forecast based on the likely scenario of what % of your customers will be lost, and of those that remain, how much of their spend with you will be reduced. (Keep your assumptions simple so you can revisit them as needed).
- Cash will be critical for business continuity. You don’t want to be cash-strapped in a down market. Use your revenue and collections assumptions to develop a cash forecast. Then, identify a “minimum cash” target that you feel comfortable with to weather this storm. In most sectors, Hawaii CEO’s should aim to build
twothree months of fixed costs (payroll, rent, etc.) in the bank. This “war chest of cash” is needed to safeguard your business through the economic downturn.
- Assemble a core team to build a comprehensive action plan to address the liquidity gap you have previously identified. Look at all the drivers of cash – from revenue-loss mitigation, to aggressive cost-cutting, to rapid collections, to delayed payments to vendors, capital expenditure avoidance and contract re-negotiations. Prioritize immediate actions that your team will take and set clear targets in each area. Make sure there is individual accountability and a sense of urgency among the members of your core team. Nothing is more important for your business.
- Be ready with a prioritized list of more aggressive actions if revenue declines are deeper or longer than you first assumed. Also, agree with your core team on what events should trigger those actions.
B. People Plan
- Act as a bridge between your team and the health advisory by State agencies.
- Over-communicate with your employees, customers, vendors, and other stakeholders; and encourage them to escalate any key issue directly to you or a designated chief-of-staff. Uncertainty will breed unnecessary fear, and kill productivity.
- Invest in remote work, setting up as many of your employees and contractors to work from home, as feasible. Those who must come in to work will need staggered shifts to ensure “social distancing”. To make this transition effective, it is important to establish new ground rules for working “together” and, more importantly, do a mental switch from tracking staff efforts to looking at deliverables and outcomes. There are several great tools for online chat, task management and remote meetings to choose from. You can read our thoughts here.
- Develop a deep personal understanding of various staff roles, criticality of those roles to business continuity, and the levels of current individual performance. Build basic contingency plans for any labor shortage due to sickness or unavoidable layoffs.
C. Stabilization and Growth Plan
- Focus on the profitable core of your business. Is your organization stretched too thin? Are there lines of business which are subsidized by other, more profitable business units or offerings? If so, they may need to be temporarily suspended or permanently shuttered/ divested.
- Major work streams (core operations) and the crisis response will need most attention. Establish a rhythm for virtual, daily huddles and weekly reviews, which dive deeper and track progress against the action plan. Take direct action in areas which get stuck or need policy-level changes.
- Keep an eye on the market. While your primary focus is on mitigating business risks in this down cycle, listen closely to other market signals. As months go by, there will emerge excellent opportunities for M&A, or evolving your current offerings to deepen customer loyalty, or restructuring your business to be more online, or preparing for a “new normal” for operating on the islands. These opportunities can be leveraged by only those who are prepared.
The COVID-19 crisis will eventually blow over, and Hawaii’s economy will bounce back. Many businesses with poor liquidity or indecisive managers will perish. The bold CEO and her organization will emerge stronger at the other end. And, it will be because of their timely actions.
How can GUILD Consulting help you?
We specialize in “strategy” and “alignment.” We will perform the critical analyses and facilitate a 4-hour planning session with your core team (virtual) to develop an action plan with clear accountabilities and timelines. We will “stress test” the plan to make sure your team is aligned and ready.
To learn more, email us at email@example.com or call (808) 729-5850.