It is said that history repeats itself, allowing us to learn from the mistakes of the past. We are in the midst of a unique public health crisis and learning daily how to address it. However, we are not new to financial crisis – recent history has tested our economy and our businesses many times. What we have learned from these previous crises, is that those businesses who respond with a balance between a defensive strategy and an offensive strategy survive and emerge as post-crisis, post-recession leaders when compared to their competitors.

Easy right? Take a pragmatic approach? We do not have the resources of the Fortune 500 that allow us to build a “war team” responsible for developing a crisis management strategy. We are in the trenches, already overwhelmed by the daily crisis and just trying to survive. What now?

Now is the time to get serious and follow an action plan with contingencies in place so that you make decisions based on knowledge not fear.

Prioritizing these six actions will help businesses in all industries outline a balanced, pragmatic approach to crisis management for their companies:

Stabilize operations – plan for disruption, inventory management, labor force changes.

Business Development
Revenue – determine mitigation strategies for decline in core revenue; explore areas of opportunity for revenue replacement or future growth.

Protect employees, there will be no recovery without talent. Develop a work force management strategy with as much appreciation and empathy as possible.

  • You can reduce your payroll expense by reducing your payroll outlay.
  • You can reduce your payroll outlay by reducing headcount or across the board pay cuts or both. You can talk with other businesses in different industries and see if they can temporarily utilize some of your employees to help with right-sizing and building of employee loyalty.
  • Pay Cut Strategies.
    • Cut all team-members’ pay by the same %.
    • Cut higher compensation teammates by a higher %.
    • Don’t cut rate per hour but cut total hours.
    • Switch to a productivity pay model like a piece rate.
    • Consider 10% pay cuts of 10 employees to save one job. (20% for five employees etc.).
    • Consider moving employees to part time and transitioning benefits to COBRA.
      • This will allow employees to apply for subsidized coverage on
  • For your employees that you need to lay off, assist them in applying for unemployment benefits.
  • Communicate constantly with your laid off workforce regarding projected reemployment opportunities.
Cash Flow – Stress test cash flow, P&L, and liquidity – build a model that allows you to be proactive and nimble. Make informed decisions. Practice the plan.
  • Prepare and maintain a rolling 13-week cash flow forecast.
    • Worst Case, Best Case and Most Likely scenarios.
  • Based on the current version of the 13-week cash flow forecast will you run out of cash?
    • If yes, how much capital/debt must be raised? What is the maximum amount of debt that we can raise through traditional and non-traditional sources?
      • Small Business Administration will provide Disaster Assistance Loans for small businesses impacted by Coronavirus (COVID-19) to address short term working capital needs.
    • What is the maximum amount of capital that can be raised from ownership?
    • Based on the answers to the above, what is the optimal balance of debt and equity to raise within the next 13 weeks
  • Repeat the above steps each week until you get to the other side of the crisis

Costs – determine immediate, short-term, and long-term cost structure changes. Determine what metrics trigger each change

  • Make sure you are cutting costs and restructuring towards a strategy, rather than cutting across the board
    • Don’t cut your overhead by 10% pro-rata, cut 100% of your costs in areas where you are not getting your targeted ROI and then invest in the areas where you are achieving your goals
  • Check insurance coverage on autos or trucks used for delivery; reduce unnecessary insurance coverage
  • Determine if business interruption insurance claim applies
  • Go through list of ACH payments and Credit Card payments and terminate ASAP if an unnecessary cost applies
  • Vendor review
    • Find out what kind of rent extension you can work out with landlord, if any
    • Terminate Linen and towel service
    • Terminate window cleaning service
    • Save on fewer Trash pickups, composting and recycling
    • Terminate cleaning service for specific items, uniform, floor mats
    • Check vendor agreements with your legal counsel and determine if vendor contract can be terminated due to force majeure language. (Force majeure is a French word for Superior Force). The clause is usually intended for fires, tornados and earthquakes, but may specifically exclude a government action or war.
Customer Relationships
Stay close to customers
  • Same as talent mentioned above, there will be no recovery without them! More on maintaining customer focus below relating to strategy.
Take this opportunity to DRIVE CHANGE.
  • Change is hard and people resist it. Take advantage of this crisis as justification for you to do what you have already known you needed to do but were afraid to try.
  • Seize opportunities! Challenging times are full of them.

Resolve to make 2020 a year during which you stay outward-facing and on the offensive, defensive actions are necessary right now.

  • Many have conducted a round of layoffs or reduced compensation, and more of the same may follow, along with cutbacks in other guises. But watch out! In such an environment, people typically start obsessing on the internal (in particular on who and what will be next to go).
  • Even more counterproductive, they start forgetting what keeps the whole enterprise alive in the first place—customers! As a leader, your job over the daunting weeks ahead is to block that tendency with your positive energy and example, keep your team riveted on delivering innovative products and services.
  • And remember: Your customers are hurting, too! Offer them better-than-ever value, and you will sell more today and raise your chances of keeping their loyalty after these dark days pass.

Competitors – Assess the competition; how will you outperform your competition during this time to be posed for recovery.

As you know, the situation is rapidly changing and new information is being made available constantly. We are committed to keeping you informed.