Prior to the COVID-19 pandemic, the economy was booming at a significant pace with record low unemployment and growth. Business prospects were high. However, the pandemic has caused massive disruption to businesses and the disruption varies across industries. After the initial shock of shutdowns, restrictions, and new work practices, most companies quickly adapted by reducing costs and, in many cases, have since brought back employees.
While this has been a trying time for all of us, we can also view it as an opportunity to look more closely at our businesses. In my experience, when business is good and profits are flowing, it becomes easy to put off the many things in your company that may need to be fixed. Solid growth can mask lots of issues within businesses because when operations appear to be running smoothly, it feels as though there are no urgent issues to address. It’s human nature.
Here is one of my favorite quotes from a client:
“I love recessions! It forces us to get back to the basics and clean up our act. It gives us a good reason to take a fresh look at our business, all of our people and processes, and address issues that we should have taken care of anyway – when we were too busy to get to it. Our business always comes out of a recession stronger than when we go into one.”
I have been asking many of my clients what they have learned about their business as a result of COVID and what they learned about their people, risks, business practices, etc. Below is a brief outline of areas to consider when asking yourself these questions:
- Strategy – Where are the holes in our strategy, the customers and markets we serve, and the products or services we deliver?
- Business model – Is our business model durable and how can we improve our value proposition?
- People – What did we learn about our key people? Did they step up to the plate as leaders? Do we have succession issues in key spots?
- Waste – Are we efficient in the utilization of our people and processes? What areas of our business are inefficient and need an overhaul?
- Technology – Are we getting the most out of our technology and have we made enough investments in it so that it gives us an advantage and makes us more efficient? Do we have mechanisms in place to protect our data and system security?
- Risk management – Do we have too much concentration in one customer, market, supplier, etc.? Should we diversify?
- Capital allocation - How healthy is our balance sheet in light of increased demands on capital or the need to fund losses? Do have enough dry powder or do we need to re-evaluate what we do with our profits each year and leave more capital in the business?
- Credit – Do we have the right credit structure for our business and are we with the right banking partner?
This recession has been difficult and has tested companies in many ways. We have all paid a price, and it is not over. I encourage everyone to reassess your business at this time based on what you have learned so that you have a stronger business coming out of the recession than you did when you went into it.
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