7 steps to successfully lead your company through crisis — including the one caused by Covid-19 / coronavirus

Step 1 — How much cash do you have?

Step 2 — What kind of burn do you anticipate?

  • Step 2a — How does your company perform without the effect of the crisis? If you do not know this by heart, make sure to determine how your operational business was doing as soon as possible — what kind of revenues would you normally make, what kind of costs do you need to cover, what is your monthly EBITDA etc. This is of utmost importance because it presents your baseline for determining your anticipated burn during the crisis period. I will not do a deep dive into the topic here, because you really should be able to answer this question every month — this presents basics of management and good governance of the company (btw. if you need help with controlling and reporting, reach out or check SASH reporting — https://www.sash-reporting.com/en/).
  • Step 2b — Will you be able to maintain your current revenues? You should verify, whether you will be able to continue to invoice as you have in the past or will your invoicing capability be significantly reduced. You should understand, whether the crisis mode and with it connected government decisions directly influence you (shutting down of certain types of businesses etc.) and whether they directly or indirectly influence your customers, which could mean significant change of their purchasing habits (they could push to get out of contracts, not sign new ones, stop all investments etc.). Industries, that will be the most affected by the current coronavirus related crisis, are hospitality and tourism, travel, public transport, non-FMCG retail (especially “brick&mortar”), personal services (hair-dressers, cosmeticians etc.), mining, production of non-essential products (non-food and non-medical products) and a number of other services industries (marketing, management consulting etc.). Worst-case scenario, which you should consider, is that your revenues dry up completely and you are left with fixed costs. However, if you are not directly affected by the crisis decisions, you should be able to keep at least part of your revenues — and do determine this part of revenues diligently.
  • Step 2c — Will your customers continue to pay regularly? Being able to do work and generate revenues does not always equal also the amount of cash you receive, especially during crisis time. Do go over the list of your customers and define which are likely to keep paying as before, which are likely to start delaying payments and which could potentially go bankrupt during the crisis — and thus not pay at all. You can best do that, if you classify your customers according to industries they are active in — and attribute certain risk to those industries (in the sense of how much is the respective industry influenced by the crisis). See Step 2b above for list of the most affected industries by the current crisis. Please note, that this list might change (and expand) in the next weeks and months).
  • Step 2d — Which of your costs are absolutely necessary? You should determine, which costs are a given for you in order to be able to continue to provide your products and services to your customers. Furthermore, you should also determine how quickly you could lower your costs. Please note that you should not aim to cut the costs just for the sake of cutting, but you should be willing to make the company as lean as possible, while still being able to further develop and grow your business.

Step 3 — How long is your runway?

Step 4 — What kind of funding and assistance options do you have from the government and from the banks?

Step 5 — Are you able to raise funds from your shareholders?

Step 6 — Consider all of the above, decide and act.

Step 7 — Regularly observe what is happening and act accordingly.

CALL TO ACTION! — FREE / PRO BONO CONSULTING

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