Management challenges don’t come any bigger than this. COVID-19 has impacted not just your business or industry; every major developed country in the world is either in a recession or suffering from a slowdown in growth. While we will not know when we will turn the corner, or what shape the world will be in when it does. What we can be sure of is this, that this is a time of tremendous change, and with change comes both danger and opportunity.
In a downturn, this deep and widespread, you have to adjust your key thoughts about your business. To lead through uncertainty and to strengthen your organization for the long term, you need to focus on four things: Cash, Growth, Operational Details, and Leadership.
Cash Is King
I had a professor at Wake Forest that use to always say to us, “Cash Is King.” Protecting cash flow is the most central challenge almost all small to midsize businesses face today. Before COVID, many companies’ key indicators were growing revenue and profits. Revenue is the weakest number to focus on. The income statement often receives more attention than the cash flow statement. You must shift your focus from the income statement to the balance sheet. Every sale/project must be judged on how much cash it generates, how much it consumes, and how soon does it bring it in. In these uncertain times, you have to look at your business the way your banker does. Focus on your cash and debt balances.
Focus on The Right Growth
For years many leaders have had a laser-focus on growth; in this COVID-19 environment, they may need to adjust their mentality. Growth that is profitable and cash efficient should be the only kind pursued during these challenging times. Evaluate growth to ensure that it does not consume excess amounts of cash or increase complexity to the operations. Choose your customers and the market segments you will continue to serve with your cash breakeven in mind.
Adjust Operational Details
Winning in these times will require leaders to change how they manage day-to-day. They will need a detailed understanding of what is happening both outside the company, with customers, competitors, and internal operations. Leaders will need information that is up to date and unfiltered. The best way to gain this type of information is to personally visit both customers and suppliers. While strategic level thinking cannot and should not be abandoned, leaders must be involved, visible, and communicating daily. This focus on operational details will allow the leader to be prepared to take swift action to protect the company.
Demonstrated Leadership
I have written before on leadership styles; however, in times of a downturn, the leader needs to demonstrate a few critical behaviors. In uncertain times, reality is essential but can be elusive, so continuously monitor your environment and communicate often. Most people are anxious if not panicking already. The leader will have to inspire the organization, starting with their direct reports. Help the team to focus on the new priorities by doing it yourself. Leaders must be able to listen well, explain, and answer questions often, and then do it all over again to make it through these uncertain times.
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