The late Albert Einstein once famously said “In the midst of every crisis, lies great opportunity” and I’ve found myself reflecting on this recently and attempting to apply it to us business owners as we battle our way through the challenges thrown at us during the pandemic.
I am naturally wired to be an optimist but – confession time – the truth is I have found it really hard to stay optimistic recently, as I see and hear first-hand the impact COVID-19 restrictions are having on many of us, both personally and professionally. There have even been times recently, I must admit, when I have called “BS” on the concept there could be opportunity in the midst of crippling lockdowns. But the truth is, there is always opportunity and the main one that applies to every business is the opportunity we have to reflect, learn and perhaps in some cases, re-learn.
The first step to finding your lessons is to accept that nothing is 100% certain in business, there is always risk; some risk we can mitigate, some we can not. External risk has caused disruption right throughout history – sometimes it’s appeared gradually, other times it’s appeared as a big bang with immediate impact, think GFCs, recessions/ depressions, floods, wars, earthquakes, bloody COVID-19, and so on.
Accepting these risks, taking a breath, making mental space for perspective and applying these lessons can help to make our businesses stronger, more focussed, more resilient and more profitable during the good times, which will be back.
Here are the four lessons I have re-learned over the past 18 months. I hope they help you too…
This does not necessarily have to be physical cash, but it’s critically important that your business has access to 3 months’ cash flow via any variety of means, such as an overdraft, capital injections and so on.
The old, but oh so true saying is “Cash is King,” and it’s never more true than during a crisis.
As we (hopefully soon) re-enter recovery mode and start to build our businesses back up to full capacity, this is an important metric to keep front of mind in the good times – we need to rebuild our businesses’ access to cash flow, because no one knows what’s around the corner.
Lesson 2: The importance of planning and, in particular, scenario planning.
Scenario planning is identifying a specific set of uncertainties, or different “realities” of what might happen in the future of your business. It sounds simple, and possibly not worth the trouble or specific effort, however, building this set of assumptions is probably the best thing you can ever do to help guide your business in the long term.
Farmers, for example, use scenario planning to predict whether the harvest will be good or bad, depending on the weather. It helps them forecast not just their sales but also their future investments. Military institutions use scenario planning in their operations to cope with unlikely situations, anticipating the consequences of every event. In this case, scenario planning can mean the difference between life and death.
Some scenarios you may want to test and plan for in your business.:
- What are potential opportunities and impacts for me when the borders start to re-open?
- What would happen if my business lost its biggest customer?
- What would I do if my business gained a new customer, twice as big as the current biggest customer?
- What if my supply chain runs into issues?
- What if my most important employee(s) leaves the business?
- What would happen if we doubled our sales and marketing investment?
We recommend every business owner conducts a ‘Premortem’ like this at least annually, to check your business’ resilience against various scenarios and to prepare yourself as best as you can for future downturns. Check out how business consultants, McKinsey & Co, explain the concept of a premortem in a project setting.
Lesson 3. Have an up-to-date Business Continuity Plan (BCP Plan).
The official definition of Business Continuity Planning is the process of creating a system of prevention and recovery from potential threats to a company. The plan ensures that personnel and assets are protected and are able to function quickly in the event of a disaster.
For some of us, depending on industry regulation and individual legal obligations, this may be mandatory, but many businesses do not have a documented plan.
Think back to the first Alert Level 4 lockdown announcement; How prepared was your business? Take the lesson and use this opportunity to consider and document your BCP plan and ensure your key stakeholders have a copy and know their responsibilities.
Lesson 4. Now more than ever – you can’t sell a secret.
You’ve heard me refer to this saying many times before – and I’ll repeat it forevermore, because the truth is, if your customers don’t know who you are, what you offer or where to find you, you’ll struggle to grow. Marketing will always remain critical for business growth, no matter what pandemic Alert Level we find ourselves in.
But, before you reach for any of the best-selling marketing textbooks of the past decade, bear in mind that consumer behaviours have changed dramatically during COVID-19 and new marketing trends are now emerging – you might want to revisit some insight we shared on this last year: You Can’t Sell a Secret. Don’t Make the Same Mistake McDonalds Did is another good one to revisit. As restrictions ease and we head into the summer/ Christmas period, it makes perfect sense for many businesses to double down on their sales and marketing efforts.
I want to say a big thank you for being a member of Grow NZ Business, we are passionate about your success and are always here for you, in good and challenging times, and I am looking forward to better times ahead for us all.
History does give us comfort here and it does show that, for those who are resilient, Einstein is right, “In the midst of every crisis, lies great opportunity” – to learn, to make our business stronger and focus on what really matters.