After the 'gold rush': When the spoils of the pandemic disappear
August 6, 2020
By Martha Sullivan
There's a gold rush of sorts in 2020. Not for everyone, of course, but for some lucky souls there is.
Perhaps your company is one of the "forty-niners" of 2020 by virtue of a rush in demand for your products and services. Maybe you swiftly flexed your products, services, and capacity to replace and grow volume. Or perhaps your business was fortunate enough to participate in the Paycheck Protection Program (PPP) to gain important financial support during the pandemic. Once the PPP was announced, bankers' and accountants' phones rang off the hook as companies rushed to get their applications filed and funding completed. Lastly, there are those companies that came into the pandemic with strong demands and/or backlogs. These are the people who are working their tails off to capture every opportunity to ring the register that they can. To mix metaphors, many businesses have seized these opportunities and can take advantage of the rare COVID silver linings.
Of the business owners I've talked to, most are immensely grateful for the windfalls received. Their new workloads are overwhelming, as they sort through the programs, determine how to best stay engaged with customers, and meet the new demand levels (whether up or down) in the most cost-effective way. Many admit that they are waiting for the other shoe to drop, so they work as hard and fast as they can to keep the daily operations going. Maybe you're one of them.
While Congress is considering additional measures as I write this, I can't help but wonder if the "gold rush" is done. Many businesses have burned through their PPP monies and any balance sheet reserves they may have had going into 2020. Companies agile enough to move into new high-demand products, such as personal protective equipment, cleaning solutions, and the like, are finding that there is now competition where there was none before. Some suppliers are catching up with their backlog as new shortfalls emerge. Strong balance sheets, demand surges, and PPP allowed many of us to catch our breath after March knocked us out. Inevitably though, that gold will run out, if it hasn't already. Many businesses are now facing the tough decisions that the "rush" let us put off.
My personal perspective is that this horrid pandemic is going to be with us for a while. It wouldn't surprise me if it's 2022 before we come out of it. Professionally speaking, this totally sucks. Big time.
Yet my mindset isn't doom and gloom, and yours shouldn't be either as it relates to your business. The best mindset is to find opportunities and adjust accordingly. In some circles, this may be called "acceptance" In others, they call it "reality" I call it "reset" There are three key elements to a "reset":
- First, stop and breathe. Commit to hitting the pause button. Take time to routinely assess and update your assumptions about the rest of this year and the next two. Verify the shared understanding of where you are right now and what you collectively believe about the future - as a company, team, market, and even as a family. There's only one doom-and-gloom rule during this pause: Assume that COVID will not magically disappear until the end of 2022. Accordingly, workspace and human distancing is an ongoing expectation and purchasing behaviors of consumers and businesses are influenced by pandemic conditions. If there are changes or different assumptions that you'd make under this scenario, put them on the table now. Focus your conversations around the best-case, most realistic, and worst-case scenarios and build your action plans from there. Then put it in writing.
- Get your arms around your financials. When the pace of a business is crazy, meaningful financial review and analysis often gets pushed even farther back on the back burner. This includes building and/or maintaining your 13-week rolling cash flow budget. Plenty of people resist doing this and it always shows in the results. I've seen this firsthand in my turnaround experience. If the financials are an area that you're uncomfortable with, find someone to help you get comfortable. You can be better, do better, and achieve better with this one tool alone.
- Huddle with your team regularly to review plans, to-dos, and accountability. Celebrate the wins. Understand why and how balls bobbled. Set expectations for the next period. Rinse and repeat.
COVID caught the world off guard and everyone had to scramble. Hopefully, you and your business had some golden safety nets to help you hold steady, such as PPP, a strong balance sheet, or a surge in existing or new demand. Now that you have more experience of pandemic life under your belt, it's the time to double down and map out your next steps for navigating it longer term. It's time to create your post-gold-rush reset.
As always, feel free to let me know what you're doing and how I can help.