During COVID-19 we need to distinguish between what we can control and what we can’t
At some stage you will have to sell or close your business. When that happens will you be able to lead a lifestyle you need and deserve? What could you be doing better now to ensure you are rewarded for all your hard work and risk?
Now, during the pandemic, is the time to rethink your business. This time last year everyone was moving along on an even keel. Suddenly, in March of this year the world got turned upside down and now that a second wave has hit, many are having difficulty figuring out where they’re headed and how to protect themselves and their businesses.
Most owners of small and medium-sized businesses are not real entrepreneurs. They are ordinary people just trying to run a business. They are not risk takers, but now are being forced to take more risk than they are comfortable with. They are being forced out of their comfort zone. Focusing on designing, selling, and installing mechanical systems is not going to protect them during this crisis. They need to become more entrepreneurial in their thinking and more customer focused.
There are always opportunities available to and often we can ignore those opportunities, but not now. Now is the time for action. Whatever issues you are going through are the same for your peers. This is not the easiest of times to be making strategic decisions, but it is definitely the right time to do it. Small-and medium-sized businesses need to protect themselves financially by making some hard decisions.
There are opportunities for consolidation. If you are close to retirement, finding a competitor or complementary business who would be interested in acquiring your business would help your exit strategy. Only 20 per cent of businesses listed for sale actually sell. You may be forced to sell your business to your employees. If you want to grow your business, now is the time to consider an acquisition. The synergies of combining two businesses can be incredibly attractive. It can generate a significant opportunity to cross-sell more services to your existing customer base. Imagine combining a HVAC business with a plumbing business. Both would double their potential for selling to existing customers. That and the reduction in overhead would enhance the bottom line for both businesses. One HVAC contractor in the GTA with sales under $2 million is paying occupancy costs of $110,000. A company acquiring this operation would see an immediate $110,000 saving without any other synergies.
Bringing on key employees into ownership is often a good strategy. These people will stay with you for the long haul and will start to think and act like owners. That will bring a new mentality and vigor to the business, while making the business less dependent on you.
Review what has happened to your business since March. Are you heavily into a segment of industry that has been negatively impacted by COVID-19? Restaurants and fitness centers are really struggling and will likely have a high failure rate. Other segments such as municipalities have temporary problems because many of their facilities such as community centres and gyms are closed. But at least those businesses will rebound and be able to pay their bills. Look at where you are weak and diversify. On the other hand, maybe some of your customers have been successful such as sports retailers and mail order businesses, if so, then how do you expand that segment of your business?
Communicating with your customers has never been so crucial to your future. What are you doing to enhance your social media presence? More people are spending more time on social media. Can you provide them advice such as how to winterize their own systems and how to change their own filters and how to improve their indoor air comfort and quality? Don’t be afraid of giving away a few ideas, because it may come back to you in the form of new relationships.
Also, this is an opportunity to explain to prospects and customers the advantages of programmable thermostats and water filtering systems among other ideas.
What are you doing to manage your cash flow? Are you getting deposits, taking credit cards etc.?
Make sure you have structured your business to minimize the impact on you personally if the company gets into financial difficulties. Discuss this with your accountants. Some common-sense things to do are take out retained earnings from your operating company. Put security against the company assets to protect your shareholder loans.
This is also the time to look at your operating structure. Start streamlining your systems and become more technology reliant. This can improve profitability and cash flow. Send out invoices by email and encourage customers to pay by e-transfers. Review your customer relationship management (CRM) system and fine tune it. If you don’t have one, get one.
We are all under immense pressure and this makes it difficult to focus on running our businesses. Where possible join or form a mentorship/peer program to help keep you on track. Industry associations, such as HRAI have these types of programs running and will work with members if asked.
We need to distinguish between what we can control and what we can’t control. We have no control over the economy or how the government responds to COVID-19. We do have control over how we respond to the economy and how we respond to the realities of COVID-19. In previous articles I have focused on dealing with COVID-19 and in this article, I have provided you with guidelines on how to make your business safer and more profitable. It is up to you to take a leadership role and protect yourself and your business.
Be safe, be calm, be kind, be focused.