RECOVERY WILL NOT BE AN ON-OFF SWITCH
Just a few short weeks ago booming business had most of you scrambling to find more skilled workers. That was then; this is now.
Some of you may still be in that situation but the vast majority are not. Most manufacturers have shut down excepting skeleton crews. Some of you have to produce items needed by Homeland-Security-defined essential businesses while the rest of your operations sit quietly. Some are adding people and trying to ensure supplies for new 24/7 production.
Here is advice that applies to each of you right now: Take care of yourself. Eat right, sleep as much as you can, and exercise.
That may sound crazy and out of touch, but the reality is that there’s a reason why the airlines always say: “put your own oxygen mask on first.” You cannot think clearly, make good decisions, or stay healthy in this environment if you don’t take good care of yourself.
The second priority for each of you is to think about what is best for your employees. No business can recover without them. Identify those employees most critical after Covid-19 is in our rearview mirrors. Find a way to keep them, which may include unemployment right now. Do what is best for them.
The third priority is to maintain a realistic picture of cash flow. Your business may be strong but only if you get paid by customers and your suppliers are in business.
When and how much of your receivables will you collect? Don’t guess; ask them. Which suppliers should you pay and when? Again, don’t guess; ask them. If your cash position looks healthy, pay all of your suppliers—early to those who need it.
Certainly, get an understanding of government support options and take advantage of those important to the future of your business.
Your next priority is to think about the future. We don’t know if this shutdown will last into summer, into fall, or longer. We don’t know the geography of its future, nor the severity. But we do know this won’t last forever. It will not be a glorious sunrise bringing back life to everything just as before. It will be a sun peeking through still cloudy skies and then ducking back.
Do not think for a minute that we will return to the old normal. Some markets will bounce back quickly, others will be changed forever. Paying attention to submarkets will be more important than ever. For example, commercial might recover more slowly than retail. Customers that used to pay reliably may not for several years. One supplier who didn’t make it through this might determine which products you will be able to produce first. Your need for timely reliable information is higher than ever.
Without taking your eye off of cash flow, understanding the conditions of each submarket and the supply chain it involves--which includes your manufacturing capabilities--will be integral to your future. You will not suddenly be able to serve everyone. Buying materials and making payroll takes cash you might not have. Those skilled workers you worked so hard to find may not be available.
If you are struggling, you likely cannot support one submarket all the way to full-out without impacting other submarkets. Conceptually aligning your critical resource capacities with potential evolving needs of various submarkets is an important task to undertake.
As you think about restarting operations, consider who can pay you, what you can actually supply, given supply chain and your own cash considerations, and what markets are most important to you in the longer term. Those markets may be different now. A strategic reset is likely needed for most of you.
The recovery will not be an on-off switch. It will be a set of rheostats that we will need to finely tune and balance. Start thinking now about how they impact one another.
PS: If your business is booming, consider helping all those in your supply chain and neighborhood who are not so lucky. Luck comes in both good and bad. Next time you may be on the other side.