Business owners should have both defense and offense in mind
This week included many phone call meetings with my various clients as we discussed addressing the rapidly evolving COVID-19 challenges. Our focus was on their people, cash and near term forecasts. And as part of the forecasting, we did scenario planning which included brainstorming around playing defense and offense.
Defense had to do with looking at inventory management and raw material purchases to ensure they are brought in line with forecasts. Defense also had to do with identifying discretionary spend that could be eliminated or deferred. And lastly, defense included tapping in to available lines of credit to various degrees depending on the particular client so that if things get worse before they get better, these companies would have cash on hand to manage through it.
We also made sure that our meetings this week included steps for playing offense. And the greater the balance sheet strength of the client, the greater the offense that can be played. Here are some of the very basic steps that are being taken now by those with a balance sheet and cash position to leverage:
1.) Reach out to customers and let them know the operating status of your company. All across the country there is great inconsistency from city to city regarding how quarantines and lockdowns are being implemented. If your company remains open because you're excluded from local government requirements, let your customers know. If you have customers in other States, they may hear on the news that your city is in lockdown and may assume incorrectly that you're closed for business. If you're open, let your customers know it.
2.) Review all current open proposals/quotes that are currently pending with customers. A review of each to determine which went to customers that might be struggling and a modified proposal that includes better pricing or better terms could help them through their difficult time. The best time to build a long term relationship with an existing or new customer is when they are facing a difficult time. Partners that help them through this may have a strong partner for years to come.
3.) Review recent "lost" proposals/quotes and determine which are worthy of revisiting immediately. They may be worth revisiting because the company that was awarded the order might have to close given their local quarantine requirements or they might be cash challenged and unable to fulfill on the contract in a timely fashion. Odds may be low that you could change the award decision, but all it takes is one to make this strategy pay off for you.
4.) Review your current strategy for new proposals going out during this challenging time. Your strategy pre-COVID-19 may have focused on price or delivery or terms, or specific features of your capabilities. But things are currently very different in the eyes of your customer. Rethink immediately what may have changed on their end and perhaps your proposal should change to reflect their new thinking. For some right now, access to product is even more important than pricing. And for others, it's more about payment terms right now then it would have been just a few weeks ago.
As a business owner/CEO right now, don't play the role of a turtle only. Yes, protect your business value and net worth by playing needed defense. But don't miss opportunities to play offense. Balancing defense and offense will help your company come out of this crazy time either with less damage to your company valuation or best case actually with a greater foundation for building it.
