For years, Jim McCann has taught the steps businesses can take to improve their financial health to weather a downturn in the economy. But no one could have foreseen the global health crisis that could overnight shut down the hospitality and travel sectors that drive the bus and motorcoach industry.
Even as business ground to a halt, there are some actions operators should be taking, McCann advised during the “Leading your company through the COVID-19 crisis,” an online Town Hall meeting held March 19, hosted by the United Motorcoach Association.
“Every operator is going to find themselves in a different situation,” said McCann, with Spader Business Management. “Some are going to have deeper pockets and should be able to maybe handle the downturn in business better than others.”
Here are his five tips for protecting your bottom line during this economic downturn:
1. Do an assessment. The first step is taking an assessment of the business to determine where it is at financially and then determining what steps are needed.
“Our role as leaders of the organization is really understanding what are the real facts and using reliable sources, both internally and externally, and with events just like this (UMA Town Hall meeting),” he said.
2. Communicate with employees and clients. Be a resource for your staff and clients. It’s important that you meet with your teams and pass on legitimate data from authorities and where the current situation really is. If you’re laying people off or furloughing people, still communicate with them and be a resource. It’s going to keep them part of your team. You’ll need them as we get out of this.
“You’ve got to be honest with your employees. These are really uncertain times. We don’t know what next week is going to bring, and we don’t know when this downturn is going to end. But we do know that it’s going to. As part of that leadership role, optimism about the future is really important,” McCann said.
Take a similar approach with your clients. They aren’t going away and they need to hear from the leaders of your organization. Let them know you are going to be prepared and ready for them when business gets back to normal.
3. Take control of your cash. Be intentional about every single dollar that is going out of your bank account. Cut off all the purchases without top-level approval. Put together a best-case and worst-case weekly, 30-day or 60-day cash flow projection. Raise cash if needed, and that may require borrowing money.
“I remember in 2008 and 2009, many, many organizations had their lines of credit frozen, so be prepared. Think about how to generate that cash. Pay attention to your outstanding receivables and attempt to collect them,” McCann said.
4. Stop the losses. Figure out what you’d have to do to get the losses to a manageable level. Look at reducing payroll. Think about your reduction in terms of where your plateaus are and where you want to be. Thinking about the future of the business is important as you start to look at finding out what plateau you’re in and attempt to get to the top of that plateau as fast as you can.
5. Eliminate the valueless. Now’s a great time to re-engineer the processes that your organization has and be really ruthless in eliminating wasteful processes. Are there things you’ve always wanted to do but haven’t had time? Could they make a difference in the business? Now’s perhaps the time to think about trying those things. Redeploy your best people and put them on those projects.
“It may make you a stronger company as you get into the future and you come out of this. Similarly, think about trimming the folks whose skills or interests aren’t going to add value to your company in the future. This could be an opportunity for you to think about those things,” McCann said.
Although your business may feel like it has come to a standstill, you need to move quickly to put these actions in place, McCann advised. They will not only help you survive this economic calamity but can set your business up for success when things turn around.