A business requires much preparation for unseen situations. That is why it is beneficial to perform excellent research before starting a business. This will help to navigate and explore the best way to face crises by understanding the history and fundamentals of the industry. As a CEO of any organization in this world of multiple businesses, from fashion to real estate, some strategies are common in times of battling crises such as the Great Recession, coronavirus, natural disasters, etc. Through the experience of many great leaders, we have drawn out a great playbook on things to focus on during crises as small business owners.
Crises are not a time to tremble and make harsh decisions based on the information you are receiving. You could receive information from news, employees, competitors, vendors, customers, or friends. It is time to have clear, rational thinking to be successful as a leader. When you feel the world weighing on your shoulders, remember you need to run your business one step at a time. Focus on what’s important, the facts, and avoid what-ifs. Make a list of things to pay attention to in order of priority.
Small business owners often attack the obvious immediate problem instead of the greater picture. The step is understandable and suitable for some situations. But it is best to look at the bigger picture which will help you understand what’s still running in the business and what needs to change. The back step will give you time to comprehend the size and scope of the crisis and integrate the business model through its strengths and weaknesses.
Cash is the backbone of every business the same way oxygen is to humans. Crises may resolve by getting government stimulus, but you may want to know how it benefits the business and your clients. Some CEOs won’t program what to use the money for and make hasty decisions instead of smart choices. A small business owner must know:
What part of the it will last
How long will the business keep getting support
How to extend the period of the money
And how to make money last according to the situation.
You also must know the business break-even point and the minimum sales needed to maintain the business. Also, have a backup plan if sales fail to keep the business at speed.
Crises are a time to evaluate sales and their pipeline against the forecast. If the production pipeline is insufficient, the business owner needs to decide and create a plan to increase the work. You may be thinking of expanding the production of core products or services, but first, you have to be sure the decision will stimulate a significant part of the business. Start by outlining staff with positions they function optimally to minimize overtime or double time. Also, focus on reducing costs by reviewing sales forecasts and staffing requirements.
Crises forcefully cost reduction in business expenses. Lower expenses lead to less revenue in business funding. Before cutting down expenses, identify your current and past budget to find loopholes of financial inefficiency. This inefficiency is unnecessary spending done in the past that had no significant impact on your business. Also, consider the implications of such expenses on your everyday business before letting go.
After cutting costs, another way is to halt some business practices that lead to unnecessary expenses. For example, you can stop internal projects, meetings that have nothing to do with the crisis, and team training. You can also cut down on employees or employees’ pay by automating the processes. The automation will allow more employees to listen to customer complaints by prioritizing cash flow.
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