8 Steps for Crisis Management Plan
In the nearest future, worldwide economies will face one of the most powerful financial crises since 2008. There are a lot of reasons for it, but the root cause is coronavirus covid-19.
One country after another is demanding that its citizens shun society, which will cause consumer expenses, investments, and international trade and transportation huge decrease.
The decrease in the abovementioned expenses will push the gross domestic product down as well as global wealth.
During the crisis, the company's turnover tends to decrease faster than expenses. The biggest mistake that we can make now is to pretend that nothing is happening, continue to work as they usually, do not change anything, close yourself in your home and try to live as before.
In some sense, business is a reflection of biology. As Charles Darwin once noted, those who survived and evolved are not the strongest or the smartest, but those who have become the most adaptable to changes.
What we need to do in order to survive in a rapidly brewing crisis:
1. NO PANIC. Do what you do, but make a note that you need to prepare for the worst-case scenario. There are a lot of companies and peoples, that have already faced revenues decrease. It will last for a while because of consumers' worst expectations and coronavirus panic.
2. Focus on your TOP priorities! During the crisis, every business decision should result in maximum financial impact especially your biggest customers related. Learn all the details about your TOP customers and deter TOP 20% of products, which bring you most of the turnover.
3. Focus on your company turnover! Plan your expenses based on the fact that the payback of them should be obtained at most until the end of the year.
4. No point worrying about global uncertainty. Alas, The process of instability has already been started and we won’t be able to influence it. Just keep tracking about currency exchange rates, commodities prices, financial indices so you can act accordingly. Remember that local currency devaluation is a great excuse for the price increase. Moreover, the price increase for the next month is the efficient ever sales promotion for current month sales.
5. Cost-cutting. Expenses are the most important and useful thing. Extra costs, extra people, extra experiments are things that in a crisis can pull you to the bottom. Beauty is when there is nothing superfluous. Yes, you need to get rid of everything superfluous, as it is better to fight thin and motivated. Every month, think about reducing unnecessary and inefficient costs of your business. We will return to them after the crisis.
6. Manage finance pressure, that will increase every month. Perhaps it is time to critically evaluate whether you can manage with fewer employees and increase your productivity bar.
Every week keep tracking your employee's performance. Don't mess with personal targets, as monthly targets should be challenging and realistic even during the market decline. Unrealistic targets can demotivate your best employees. If there are no questions about their targets for the next period, that can be a bad signal. They can love or hate monthly targets, but they should never care. Dive deeper into the numbers, as there is a lot of growth opportunities even in failing demand. Those who don't meet their targets and don't ask any questions should be fired. Yes, it hurts, but the crisis leads to the firing of some people. This is necessary in order for companies for surviving during the crisis and return to hiring in the future. Now is the time to approach this issue critically.
7. Plan your business taking into account that crisis is not for one week only. All of the most optimistic scenarios suggest the normalization of business worldwide and international trade by the end of 2020. These optimistic scenarios are possible if the coronavirus pandemic will be stopped soon. But what if not? The uncertainty level is high now. The existing situation may begin to deteriorate, millions of people around the world will lose their jobs and this trend will deteriorate throughout 2020. Be prepared for this.
8. Save your core team! Do not speculate on external causes (transport, covid-19, etc.), do not look for the REASONS, but look for opportunities. It is necessary to tighten the requirements for lateness, absenteeism, "sick leave" and another bullying of the business. We must be ready to live according to the laws of war - with concentration and with the utilization of all efforts to carry out the planned Key Points Indicators.
The crisis is an opportunity. Opportunity for those companies, that makes business decisions quickly, that looking for new market niches and won't break under the stress. Only those companies will be able to find new opportunities and stay stronger during unforeseen and undesirable external factors in global chaos. But such companies need speed and flexibility, both in management and in IMPLEMENTATION.
The crisis will show who actually knows how to do business and who does not.
Be prepared for the worst, and the best will be a pleasant surprise. The abovementioned will help us to survive during 2020.
