How to organize your company to contain the next wave, reallocate resources, people, structure and clients, in addition to fixed costs, rent and equipment. Here we give you some strategies.
8 min read
The opinions expressed by collaborators are personal.
It is time to put in place the strategies to face the business crisis that is already looming because of the COVID-19 pandemic. The first step is to have sufficient flexibility within your organization to make the appropriate adjustments.
In principle let's talk about the home office . You have to segment your workforce since not everything can be done from home, for example the administrative area and the sales area if you can operate in the home office.
The administrative area has cost objectives such as expense controls, sending invoices, payroll and others that perfectly can be done from home today, if they manage treasury, you can ask the bank to divide the tokens and you authorize each transaction after are made.
The sales area may also be serving from home. I recommend using a technique called dropshipping , which is a business model based on selling through the internet. In addition, convert the personal Whatsapp of your sellers to Whatsapp business , since from there you can integrate catalogs of your products.
Take into account that you can already charge online; there are many platforms where you can perform this operation. The one that seems best to me is Mercado Pago , because it is very flexible.
Segment your forces: the strategy of controlled chaos
The critical elements of war are speed and adaptability. The ability to act and make decisions sooner than the enemy. Divide your forces into independent groups that can operate on their own. Return elusive and unstoppable to your forces, infusing them with the spirit of the campaign, giving them a mission to accomplish and letting them roll. ( The Art of War – Sun Tzu )
There will be operations that you will not be able to do at home office, first you have to be clear with all the workers and not hide anything from them , since this way you generate confidence and avoid misunderstandings or the famous radio hallway.
- Avoid the pitfalls of group thinking: the command and control strategy. The problem with leading a group is that people inevitably have their own agenda. Create a chain of command in which people don't feel constrained by your influence but follow your lead. It produces a feeling of participation, but without falling into group thinking: the irrationality of collective decision-making. (The Art of War – Sun Tzu)
- Take care of your resources. Talk to your collaborators about taking care of resources, since there will be a shortage, make them aware of expenses, how to save electricity, water, materials and everything financial so that they can overcome this stage the source of work.
- Take care of your people. Emphasize that you are aware of your collaborators and your customers. Provide gel, soap and all those supplies that you require so that they feel safe in their work area.
- Be empathetic. If any of them have a discomfort, always try to take care of them. Send it to the health insurance or service you have and support them by letting them know that you will not discount the day.
- Many companies have specialized staff, so try to keep it. Losing it would be extremely costly and the learning curve is long. Try to come to an agreement with them, such as working three days and paying four, or half a day to soften fixed costs.
Find a flag
Turn your war into a crusade: strategies for morale. The secret to motivating people and keeping their morale high is to get them to think less about themselves and more about the group. Get involved in a cause, a crusade against a detestable enemy. Make them relate their survival to the success of the army as a whole (The Art of War – Sun Tzu)
The financial part. If there is debt in your company, what I would do is immediately go to my banks or finance companies and renegotiate. For this, you must know your projected (IRR), if it is 16% and you are going to renegotiate your debt at 18% or 20% it will be unpayable. You must bring your numbers and options so you know what a good negotiation will be.
Remember that flow is king. With your suppliers you must basically negotiate three questions:
- Price. With fluctuations and such strong changes in the dollar, basically the inventory will always be replenished at the latest exchange rate; so you have to go to negotiate price.
- Term. If you already had 45 days of credit with your provider, calculate your new business cycle and increase those pay days as much as possible. On average for this recession it takes 15 to 20 days of extra payment.
- Something very important that a successful businessman shared with me is never hide from your creditors. Always show your face. That gives them security and they know you will pay them. In this way you will ensure the supply or minimum requirement for your survival. Take into account that to reach this type of negotiation you have to have a good relationship with the suppliers, if you are a bad businessman, it will be very difficult for you to reach a good negotiation.
Lose battles but win the war: the great strategy. Great strategy is the art of looking beyond the battle and calculating in advance. It requires you to focus on your ultimate goal and plan how to achieve it. Let others fall trapped in the ups and downs of battle and revel in their little victories. The great strategy will give you the greatest of rewards: that of laughing at last. (The Art of War – Sun Tzu)
I insist, the flow is king. With customers it is the same. I would classify them into three groups: lifelong customers, spontaneous and bad. Recover all the cash flow you can, giving a discount for prompt payment, using factoring and other tools that exist today to obtain flow.
Take into account that as well as your suppliers, you will have to stick with your clients. With the lifelong ones you will have to calculate how long you can endure the pay days. I would go to as few clients as possible to grant credit and only give them to excellent clients.
This strategy applies both to and from both your suppliers and your customers. So it is important to calculate the business cycle and always keep in mind that flow is king. To other clients, try to sell them in cash and as far as they can pay, since bad leverage can bankrupt you along with them.
In the following article I will give you some resilience tips to get psyched in recession. I will also be organizing a Business Containment Workshop that I will teach through webinars. Meanwhile, I recommend reading the story Something very serious is going to happen in this town , by Gabriel García Márquez , while I leave you with this last lesson in the art of war.
Sow uncertainty and panic with acts of terror. The chain reaction strategy. Terror is the ultimate means of paralyzing people's desire for resistance and destroying their ability to plan a strategic response. The goal of a terror campaign is not to win on the battlefield, but to cause maximum chaos and cause the other party to fall into extreme despair. In order to create an effective counter-strategy, victims of terror must maintain balance. Individual rationality is the last line of defense. (The Art of War – Sun Tzu).