COVID-19 and the Future of American Business for 2020 and Beyond
The year 2020 will forever be marked by an unforeseen lesson in vision. We didn’t see it coming, but we all must now recognize where the lesson is leading us. And we, the business and organizational leaders, are obligated to confidently embrace this time for improvement. We must be creative, innovative, and progressive in offering improved employee and customer experiences, more successful business strategies, far more efficient operations, and stronger local, national, and global economies.
Some businesses are healthy and thriving, while countless others will never reopen. Some workers are lamenting their return to the office, while others enthusiastically prepare for a new normal. We, the business leadership community, need to acknowledge the facts of what was, what is, and the future we need to create. Leaders are challenged to set new standards that focus on people at every level, that serves every investor, employee, and customer, and delivers excellence at every product and service interaction.
The American experience has always been fraught with the tension between bold individualism and entrepreneurship and the establishing of a national community to ensure a common good. The interplay between government, business, education, and non-profits is a hallmark of our American economy.
Today, the CEOs of America, small business leaders in every state and entrepreneurs in every community have a new responsibility. 2020 marks the year in which we, the business leadership community, must provide a new vision for the American economy and confidently carve our own path in this new adventure that none of us could have foreseen.
The starting point is innovation of service to employees and customers. How do we serve a marketplace full of new demands with increased technological engagement and exacting expectations of convenience and safety? Our lives and our businesses are being largely remade by this global pandemic which has impacted our businesses, families, employees, customers, and other stakeholders. We can cooperate, compete, and improve. To that end we have diligently gathered a wealth of wisdom and insights from our contemporaries—CEOs and leaders from around the country— who are sharing their understanding of this sea change that is the intersection of commerce, customers, convenience, and caution. Additionally, we have scoured numerous articles, essays, and briefs being drafted in response to this ever-changing time. We have prepared this paper which we hope will guide us all toward quicker success in the coming months, years, and decades.
This paper is crafted for the great leaders we need during this critical time. Leaders need insights, understanding, and strategies for the future. We are in a time of great challenge and transition. The current global pandemic is forcing companies, organizations, and leaders in all areas to move in new directions toward new goals. Some businesses will collapse. Some will thrive. There is no question that all businesses will be different.
It is our desire to provide leaders with ideas and realities in six fundamental areas that will determine future success. We outline some of the most significant challenges CEOs are facing today, including relating to the health of their workers and customers, ensuring the continuity of business operations and distribution channels, adopting new technologies and processes, and adapting business strategies to a new and evolving marketplace.
This paper also shares insights and ideas on how to successfully emerge from this crisis. We present various strategies and solutions to aid you in navigating the changes from unprecedented work stoppages, lack of consumer confidence and spending, new legal requirements and limitations, and ever-changing work from home (WFH) expectations.
The most successful businesses are those that are able to pivot quickly, adapt to new technologies, and lead their people through necessary transitions. Some organizations will not be able to adjust to these new realities brought about by this pandemic, and sadly, they will risk closing. Organizations willing to move quickly, think strategically, and find new opportunities will capitalize on a new talent pool, new resources, and fewer barriers to entry.
The four of us hope these insights help!
Part Three of Six – RESOURCES
Finite resources challenge every organization. Cash flow and reserves, client lists, real estate and holdings, buildings, inventory, equipment, and human talent all contribute to the success of the company. While cash might be king, CEOs who effectively allocate resources will rule industries.
As businesses begin to and continue to reopen, many are once again functioning like startups.
Consider: (1) limited cash flow and reserves, (2) a frantic pace of hiring and training, and (3) the opportunity to reassess products and services being offered and their corresponding prices. Customers have demonstrated they are willing to be flexible in the short-term which indicates that in the long-term they are prepared to accept new limited options, operating hours, and product lines. In the coming months, as resources are limited, be willing to make bold changes even if it changes your brand (just don’t diminish your existing brand).
Challenge: Allocating Senior Management Talent
There are more demands than ever and few signs they will be decreasing through 2021. As the world of business changes, very few will be able to utter the phrase “that’s not in my job description” as for now, most everyone will need to take on new roles and tasks as a new reality takes hold.
Opportunity: Everyone understands that this season of change is demanding more attention from leaders and people are generally gracious in response. This is an opportunity to introduce new thinking toward the very helpful idea of “What is it that we are not going to do so that we can do what we need to do?” The COVID-19 world is forcing changes to how resources and people are allocated. The opportunity is that more people will be cross trained with the unintended benefit of preparing more employees should a partial future shut down be necessary.
Solution: Focus the senior management team on strategic and critical thinking concerns, specifically as it relates to greater opportunities. Assess and redefine leadership responsibilities empower lower levels in the organization to be accountable for routine activities and involve more employees at all levels with making business decisions.
This is an excellent time to create a leader development initiative that starts with something simple— a weekly discussion group, a book club, a 90-day cohort roundtable focused on problem-solving, etc.
Challenge: Managing Cash Flow and Reserves
At the start of 2020, only 25% of businesses had more cash than debt. Now many businesses find themselves with a new challenge, debt incurred prior to the pandemic and new debt acquired to survive the shutdown. This burden is coupled with tightened cash flow due to economic slow-down.
Opportunity: Everyone understands cash flow, meeting payroll, paying vendors, and maintaining a “rainy day fund.” There is a saying in the ether, though often in a negative sense, “Never let a crisis go to waste.” A financial crisis always forces difficult conversations and often harder decisions. Companies who have wanted to pivot their brand, target audience, and product lines or services, have an artificial reason to do so, capitalizing on the opportunity to present and pursue a new vision due to the financial challenges. Stakeholders are more agreeable to change today because of the financial challenges and good decisions can be made to take advantage of this season.
Solution: Know your people, your customers, and your financials. Scrutinize every budget and line item. Develop a plan to get out of debt as quickly as possible and hire people who can. Clear old inventory to increase cash. Negotiate bad debt with customers. Revisit payment terms with vendors. Build a strong contingency and succession plan. It has been said that revenue is vanity, profit is sanity, but cash is king—this has never been more true.
Challenge: Recognizing and Accommodating Mental Health Concerns
For the foreseeable future, stress, anxiety, fear, and worry will be common among leadership and employees. Companies need to have sufficient mental health resources available to help people through these times.
Opportunity: Engendering goodwill and loyalty, and solidifying work expectations is often as simple as doing the right thing. Employees want to hear from their leaders that it is okay to have real-life issues and that there is no shame in addressing and resolving problems. Leaders who understand they are people, not machines, will show compassion and create a loyal and engaged following.
Solution: The ADA and FMLA updated guidelines related to mental health concerns. Ensure leadership and the company is aligned with those guidelines. Make the company a safe place to get help and discuss mental health issues. Establish and regularly communicate expectations that employees can and should use PTO for mental health needs as well as physical ailments.
Identify mental health options within your health care plan, or with new vendors, to ensure your people have the mental health support necessary. Provide onsite and teletherapy programs to your workforce in a confidential manner.
Challenge: Assessing Possible Company Mergers or Acquisitions
One of the fastest ways to increase revenue, enter new markets, and/or acquire new technology and talent is to purchase another company. However, mergers and acquisitions are complicated. Even in good times, the disruption to existing operations can be immense.
Opportunity: With numerous competitors under financial duress, opportunities will arise to merge with or acquire other companies. Company valuations are decreasing rapidly making the purchasing of companies more affordable. However, their earnings may be correspondingly less and suddenly unpredictable. If an acquisition is possible, you may be able to grow market share quickly.
Solution: Build an acquisition strategy that includes identifying potential takeover targets. Line up alternative funding sources or partners, and be ready to move when opportunities arise.
Reach out to existing networks to see what companies might be available. Talk to suppliers and customers, as they may know of great organizations that may be looking for new capital, partners, or owners.
Every merger or acquisition requires due diligence. If you decide to merge or acquire a company, put careful thought into creating a dedicated team to work with the other organization, so your core operation continues with limited disruption. Mergers and acquisitions rarely go as planned. Careful attention is needed to ensure the activity does not hurt your existing business, that teams will cooperate, and that customers are served.
Challenge: Assessing the Benefits of Employees versus Contractors versus Temp Labor
In times of uncertainty, when business needs to dramatically pivot to survive, working with only your current employees and their existing talents and skillsets can be a challenge. Speed and flexibility are needed. Hiring contract labor can decrease risk. It is imperative to follow labor laws to ensure contractors are properly designated.
Opportunity: Now is the time to review and rethink the skills needed on the team to succeed in the current environment, and as the market continues to change. The COVID-19 crisis has provided a unique opportunity to hire high-end contract talent at reasonable rates that can complement existing employees and help your business achieve new goals faster, and more efficiently. As your company tries new ideas and takes calculated risks, it’s easier to hire contract talent and end the contract if the project does not work. If the idea works, it’s also much easier to hire contractors who have proven themselves as full-time employees.
Solution: Determine which tasks must be completed by employees and those that can be successfully accomplished by temporary labor or contractors. The flexible costs will help offset the higher rate needed for contract or temporary labor.
It is important to work with your human resources department and legal counsel as the hiring of contract employees can be fraught with challenges. Many states have recently redefined what it means to be a contractor versus an employee, and it’s imperative that you follow current laws to ensure you stay out of trouble later.
Challenge: Managing Real Estate, Office Space, and Physical Assets
Companies that are heavily invested in real estate and physical assets are watching as buildings go unused and real estate values begin to decline. Even empty property needs to be physically secure and maintained.
Opportunity: For many companies, WFH may become the new normal. According to My Ergonomic Chair, 30% of remote workers save as much as $5,240 per year on automobile travel, parking, etc. and 91% report better work-life balance working from home. There are significant cost-savings benefits for companies as well. The new WFH environment may reduce long-term real estate, janitorial, security, and foodservice expenses. Future growth may not require as much capital spending, which can expedite expansion opportunities.
Solution: Find new operational uses for existing assets. Sell or lease real estate to increase cash on hand and cash flow to invest in other resources. Do not pay to store unused assets!
Partner with suppliers and vendors to share warehouse or production facilities.
Assess real estate needs and identify which campuses, buildings, offices, and warehouses can be repurposed or eliminated. Review contractual obligations and lease agreements to know when to take the appropriate actions. Discuss options with lessors, as other companies change their business models and have new needs, there may be opportunities to negotiate an early termination of leases if mutually beneficial.
Voted one of the Top 15 Business Growth Experts and Top 50 Sales Speakers, Meridith helps leaders develop strategies that turn uncertainty into competitive advantages.
Named one of the Top 50 Sales Speakers and Top 25 Most Influential Sales Leaders, Sam is a Hall of Fame speaker and considered one of the world’s experts on Sales Intelligence and Digital Reputation Management.
Recognized as one of the top 50 global sales and marketing experts multiple years in a row, Mark has taught in 30 countries on 5 continents and has written two best-selling books.
Mary Kelly, CSP, PHD
An economic leadership advisor, Mary helps leaders strategically plan and make difficult decisions. A Hall of Fame speaker and author of 13 books, Mary has been cited in Forbes, Success, and other periodicals.