How to Lead During a Crisis
A crisis can blindside any company without notice.
It’s the end of the third full week of the San Francisco Bay Area’s Shelter-in-Place mandate with local guidelines restricting normal business activity through the entirety of April. US Unemployment claims just doubled last week’s already historic claims. Leading an “Essential Business” means still coming into work each day and witnessing first-hand the drastically devolving economic landscape.
A crisis can blindside any company without notice. New regulations threaten the livelihood of your flagship product, a competitor(s) blitzkrieg the majority of your existing customer base before you counter an attack, or an overseas health crisis storms onto the global stage resulting in the fastest global downturn in modern history.
Although this post is in the midst of the COVID-19 outbreak, the overall principals are meant to be relevant during any crisis — national, regional, local, industry, or even company-specific.
About a Month Ago…
Since the S&P 500 bottomed in March 2009, the US has enjoyed one of the longest bull markets in its history. The last 11 years can be objectively defined as a period of nationwide prosperity, with unemployment levels reaching their lowest levels since 1969. In short, business was BOOMING.
US Unemployment Rate 2009–2020 (Seasonally Adjusted)
After 11 years of rebuilding trust in the financial markets, banking systems & overall economy, an unparalleled shock wave flipped the global modern economy on its head… COVID-19. This “new coronavirus” threatened travel to & from China, with a Chinese New Year celebration shutdown being of most notable concern to the general public. What began as an isolated Chinese health issue has since evolved into a global pandemic in under two months time.
The resulting fallout from COVID-19 can’t be understated. The historical record for US employees filing for unemployment benefits was set in 1982 with 695,000. Last week’s 3.3 million unemployment claims shattered that record by nearly 5x. With 6.6 million unemployment claims this week, the US is officially in full crisis mode.
The luxury of time is no longer on your side. Failure to act swiftly has a compounding effect that can quickly snowball into your company’s ultimate demise. The nationwide response to flatten the curve is practically a matter of life and death. Your company’s response to this crisis, and future crises, is no different.
Become a Subject Matter Expert
The operating landscape under COVID-19 is constantly shifting (and re-shifting) at a nauseating pace. Local County, State & Federal Agency (e.g. CDC/White House Task Force) Guidelines are changing faster than the population can reasonably comprehend. Trillions of dollars of economic stimulus are going directly, and indirectly, to businesses and individual tax-payers. In this chaos, someone needs to be responsible for researching the flurry of latest (and credible) developments to stay ahead of what’s going on, as reasonably as one can.
As a leader, it’s your responsibility to ingest as much information as humanly possible, while understanding the direct impact it will have on your employees, and your company. Your employees have their role within the company, and it’s not reading through 247 pages of the CARES Act or parsing through Facebook updates that may or may not be factual.
Appropriately disseminating relevant information to your employees allows them to focus on their day-to-day responsibilities and (hopefully) brings some sense of desperately needed normalcy & continuity to the situation at hand.
Immediate Action — Proactive vs Reactive
Most companies, and especially small businesses, don’t have the luxury of having 12+ months cash-on-hand to ride out a national disruption of this magnitude. Action needs should be taken in a matter of days or hours, not weeks. A crisis isn’t something you have weeks or months to prepare for months in advance — it typically storms its way unannounced, impacting every facet of your business.
Now that the threat has become reality, you have limited time to appropriately respond to best position your company to weather the storm & mitigate its otherwise catastrophic outcomes. Dragging your feet only magnifies how much destruction & havoc a crisis wreaks on your business. Examples of being proactive vs reactive include:
- You’re a local Yoga Studio/Gym with a loyal customer base. Your business just closed indefinitely with revenue screeching to an abrupt halt. Do you retain your entire staff without any plan, bleeding your company’s cash reserves dry? Or do you layoff your entire staff, leaving your employees without work when they need it most? Provide your employees with the tools, training & distribution channels to offer remote classes, allowing your customers & employees to remain connected while otherwise shut off from the rest of the world.
- You’re a restaurant owner in Florida. Across the country, states are limiting restaurants to delivery & takeout only. If your restaurant is dine-in only, you need to immediately spin-up an in-house delivery operation or sign up for a delivery service, like DoorDash. Continue serving your local community, and more importantly, make your customers aware you’re still willing & able to serve them.
- You’re a convenience/corner store owner. It’s early January and you hear about some virus in China and notice customers starting to stockpile hand sanitizer and toilet paper. Do you implement a “2 per customer” policy or order an additional three months inventory now so you can fulfill the newly heightened demand? Or do you wait until your store runs dry in late February and get stuck with every supplier is indefinitely backordered?
Communication is critical during a crisis — going radio silent is not an option. The longer information transmission takes, the greater employee concern accelerate into a negative, downward spiral.
If your company is in crisis-response mode, then timely, top-down communication provides reassurance that comprehend the severity of the situation and will be able to get through these times, together. Communication shifts focus from worrying about the crisis (outside of your company’s control) to focusing on what needs to be done, now (within your company’s control).
- Sharing (and summarizing) new developments with the team in language they can understand.
- Ensuring employees at every level of the company understand how these changes affect your company’s stakeholders at every level: Customers, Partners, Vendors, Supply Chain, Employees and Management.
- Implementing daily team meetings to update & debrief operating results, trends, and strategizing next steps.
- Create open communication channels so employees have direct access to share information from the front lines, voice their concerns, or request clarification on anything they might not understand.
Prioritize & Execute — Updating Forecasts & Expectations
In today’s environment, there’s no downside scenario too severe to be considered unrealistic. Financial projections with extreme Downside and Base Case scenarios are critical*. How many months can your business withstand if sales decline by 50%, 80%, or 100% for the next 2 months? What about the next 6 months? What if sales come back in 6 months, but don’t return to prior levels for another 2 years?
*Note: Some crises may be an upside opportunity for your business. The same overarching philosophies apply — ensuring your company has a proper preparation & execution strategy to handle the surge in demand. Capitalize on your window of opportunity before someone else does.
Take the time to do a deep dive on every expense and immediately scale back whatever isn’t vital to your company’s survival. Find every feasible area where spend can be reduced, and then reduce again; cancel monthly subscriptions that no longer provide value, reduce (or fully eliminate) marketing spend if your business can’t be open, and overall find anywhere you can save money.
This includes making sure you’re staffed appropriately for the new reality you’re living in. Layoffs and reduced hours are hard. But not having a company to come back to post-crisis is even harder.
2020 looked a whole lot different on February 29th than it did on March 31st. Your company’s priorities on every level need to shift from an annual, quarterly or monthly focus to a weekly (more likely daily), cadence. The operating environment during Week 1 of the Bay Area’s Shelter-in-Place is an entirely different world than where we are at Week 3.
Be the Leader your Team Needs
With so much uncertainty clouding every aspect of life, your employees need any semblance of guidance or reassurance you can offer. If you’re running around yelling “the world is ending” (warranted or unwarranted), everyone around you will panic. If you’re pretending that it’s “business as usual”, why would anyone take your judgment seriously?
A crisis is brutal — and no shit, these are tough times. But these are tough times, for everyone (just ask the 10 million US employees filing for unemployment in the last 2 weeks). As a leader, you need to buckle down, re-evaluate every aspect of your business, and be decisive about your path going forward — Any action is better than inaction.
We will make it through this, together. No one can reasonably know when, and what the world looks like on the other side is still unknown. With a truly unprecedented crisis, focus on what you can control, while putting yourself in a position to withstand the potential outcomes of what you can’t control.
This article was originally published by Chris truglio, Cofounder @ stressfreeautocare on medium.
Founder @ Stress-Free Auto Care | Advisor @ Holisticly