As a business owner, the worst thing you can do in a crisis is nothing.
After talking to dozens and dozens of founders and leaders within different companies during this coronavirus pandemic, it has been fascinating to see how people are approaching moving forward. As human beings, we tend to be naturally optimistic. Even throughout the rapid escalation of the coronavirus, there is still this belief that "things will bounce back" and life will be back to normal "in no time."
But the truth is, as a business owner, you don't really have the luxury of making decisions based on optimism.
Running a business during a crisis is no easy feat. This coronavirus pandemic will destroy a lot of companies, leave millions of people unemployed, and change the way we interact with the outside world for the foreseeable future.
In order to stay alive, and continue on your journey as a business owner, here are the four decisions you're going to need to make sooner rather than later.
1. What is your worst-case scenario?
As a business owner, the first thing you must do is work with your finance team to model out what a worst-case scenario looks like -- and it should be something that is a true rock-bottom plan.
What does that look like? How many months can your business last? At what points will you need to make more changes? In these crazy times, it's good to be looking at your key metrics on a daily basis. And by having a clear plan in place for a worst-case scenario, you'll sleep better at night.
2. How can you lower expenses to mitigate the impact to your top-line revenue?
Unless you're fortunate enough to be in an industry like home essentials, videoconferencing, or food delivery, you've most likely seen some type of impact to your top line as a result of the coronavirus. So the decision you now need to make is what expenses you can cut to mitigate your losses.
Ask yourself: Do we absolutely need to continue using all these services? If yes, can I cut back on users, or find other creative ways to decrease the cost? No expenses are too small to be looked at. Everything is on the table, and now is the time to take stock of how you're spending your money--and on what.
Nearly every business in the world right now is in the same position. Everyone's revenue is affected. Everyone is trying to figure out how to continue generating new business when nobody wants to spend money on anything that isn't absolutely essential.
What this means is there's an opportunity to be flexible and negotiate new terms with needed partners, service providers, etc. You don't want to lose them as a partner, and they don't want to lose you as a client, so finding ways to work together through a crisis is the best path forward.
3. What KPIs can you change to make your business more profitable right now?
For growing companies, profitability isn't always a key metric.
Instead, metrics like user acquisition tend to be seen as the priority. You can lose money acquiring customers, and for a certain stretch of time it may be advantageous for you to do so.
During a crisis, however, you are going to want to think about how you can run your marketing as profitably as possible. This has been a big priority for us at ThirdLove over the past month, changing our target metrics and how we're running the business. Reason being, we have no idea how long the world's health and the global economy are going to be affected.
Now is not the time to make bets on what might happen. Right now, your priority should be making sure your business can sustain the unknown future.
4. What decisions have a timer on them, either immediate or long term?
Inventory and retail are two areas where time plays a huge role in how things play out.
One of the hard decisions we had to make a few weeks ago was to shut down our pop-up store in New York City. We had signed a short-term lease ending in May, and even though we had a great team and the store had been running well, we had to make a very quick but thoughtful decision to close it down.
We have to invest many months in advance in inventory. We had to take a hard look to understand how many new styles, and additional inventory, are needed to support our business in a Covid world. What adjustments could be made to reduce both cost and risk? Flexibility in a time like this is key.
All of these decisions are going to feel difficult, but the worst thing you can do is avoid them. Like I said, doing nothing is the worst strategy. Instead, you have to challenge yourself as the business owner to think about what you need to do to ensure your business is alive one year from now.
When you think about it that way, the right path forward presents itself.