Like Sept 11, 2001, the COVID-19 pandemic will be a pivotal event, changing the way we do things broadly and deeply. It’s too early to know how yet. And that’s what makes it difficult to plan. But plan we must.
Every small business needs a “Post COVID-19 Contingency Plan.”
WHAT is a Post COVID-19 Contingency Plan
A Post COVID-19 Contingency Plan is a set of potential actions you need to be ready to take to insure that you’re prepared for any eventual outcome. It requires a brutal look at how the pandemic crisis has impacted your business, what you and your management team have learned, and what subsequent near-term actions you need to take now and in the next, say 3 to 9 months.
WHY have a Post COVID-19 Contingency Plan
In uncertain times, you can’t sit still and not move forward. The nightly news continues to influence our day-to-day. Yes, you have your Single Sheet Business Plan that includes high-level Values, your Why, and your BHAG and your long-range 3 to 5-year and 1-year goals. But in uncertain times like this post-pandemic period, you want to make an additional smaller, near-term plan. It’s a forecast to insure your business stays not just solvent, but profitable, and even stronger than before.
A Post COVID-19 Contingency Plan will give you confidence that you can handle whatever comes along, no matter how unfortunate or in some cases, fortunate, it may be.
HOW to make a Post COVID-19 Contingency Plan
Start by creating various financial scenarios and looking at the impact on the business of each scenario. Create a best-case, worst-case, and middle-of-the-road-case scenario. Then as you move through the next weeks and months, you’re measuring results against your scenarios and this’ll give you insight into the types of actions you should be taking, regardless of which scenario is playing out.
If you have a budget for the year, ask what if we go up or down 10, 20 or 50%? What actions do I need to take to stay financially sound. If you need to make up a 10% drop in revenue, maybe you identify new markets to go into. Are there less profitable markets you could re-access? Perhaps you could go after C and D customers. If a 20% drop in revenue should occur, you may find you have to reduce expenses. Do you need to reach out to suppliers and ask for longer terms, reduced prices, consignment opportunities? Are there investments you can make to improve productivity? Are there other resources you can access for cash? Is there equipment you could sell? You might consider external service providers like administrative support companies or an as-needed after-hours call center.
You may have to take extraordinary steps in a worst-case scenario, like reducing staff. Do a talent assessment so if that time comes, you know which people you can’t lose or want to lose. You may need an entirely new business model. Be prepared to change roles. In a worst-case scenario, people may need to be prepared to broaden their roles to do the tasks of 2 or 3 others or different jobs altogether.
On the opposite side, what if business were to explode? How would you add to staff quickly? You might identify temp agencies, additional sources of cash, or which markets or customers you’d discard. As you grow, you have to reduce the scope of people’s roles so how would you pare down one job from several tasks to one task/role?
In scenario planning, besides the financial considerations, you also want to consider potential changes in
- Employee behaviors, concerns, and expectations
- Supplier abilities and delivery times
- Your industry and competition
This doesn’t have to be a long document. In fact, it can be a 1-page list of your best-, worst-, and middle-of-the-road scenarios each followed by a few bullets that cover revenue generation, expense reduction, people, suppliers, and industry.
The purpose of a Post COVID-19 Contingency Plan is to stare the brutal facts in the face and think through how you would respond. Once you know you can make it through this, any reductions in expected revenue can be handled.
Think about listening in on Inspire Results Business Coaching’s Friday 9am virtual meeting for small business owners. The “Back to Business Roundtable” is every Friday at 9am where we discuss this topic each week. Email Kena for an invitation.