How Does Our Business Recover from COVID-19? Part One
I write this article from within the NZ lockdown environment wondering what the landscape will look like for flooring businesses by the time this article is published early May. I would like to anticipate the worst of the Coronavirus pandemic will be over. Hopefully, we have passed the peak infection rate and are now taking our first steps into a dramatically and fundamentally different business world. I hope this is the case.
Scientists are predicting that whether it has abated by now, or not, the pandemic will eventually pass. Whenever it is we get to the point of recovery, we will have things to be thankful for. But as thankful as we might be, we will be thinking about how we recover the ground our business has lost.
Right off the bat, we likely must accept profit is a notion that has been replaced by survival.
The reality is that unless something miraculous has happened between me writing this article and you reading it, we shouldn’t expect to get back to where we were anytime soon. We will have a new business reality to work in for the foreseeable future.
Right off the bat, we likely must accept profit is a notion that has been replaced by survival. So long as we deliver value to our clients, cover our costs, pay ourselves a living wage, and continue to pay a living wage to our staff, we should consider ourselves successful, and in a position to become profitable as circumstances improve.
What I don’t know at the time of writing is what further steps the government has taken to enable us to hold on to staff. We particularly want to hold on to those who contributed to our previous success. Those that haven’t been contributing need to step up, because we won’t be able to carry them. Our employees need to understand the new reality as clearly as we do. We no longer have the luxury of carrying staff who are not committed to giving our customers the very best service. While there is an imperative to keep as many people in employment as possible, we can’t do that if they are undermining our ability to survive.
While there is an imperative to keep as many people in employment as possible, we can’t do that if they are undermining our ability to survive.
As businesses, we need to do the fundamentals better than we have ever done them in the past, and it all starts with sales. Those people that come into our stores to browse, who take samples, have us out to measure, and to whom we give quotes have to be recognised as a precious commodity we can no longer afford to squander. A sales opportunity lost because we didn’t follow up, is not going to be so easily replaced with another sale in this new environment.
Our sales team must be diligent about following through on every lead. As business owners, we have to implement rigorous sales management processes to ensure we help our salespeople make the most of every opportunity.
It might go without saying, but we need to analyse our costs. The two highest costs most businesses have are rent and payroll. Landlords don’t want an empty building and staff want to remain employed; talk to your landlord about a rent holiday, and negotiate a wage/salary reduction across all your staff. In these current circumstances, you might be surprised at how readily we can reach agreement on these.
When it comes to our staff, be open and transparent; none of us works at our best when we are anxious and uncertain, and this applies to us as owners. We must be tracking our situation, if not day by day, then certainly weekly. We have to know our breakeven point; the amount of GP we need to be generating to keep our doors open. If we know how we are tracking against this number, we can reduce the anxiety and uncertainty we feel, be positive and take proactive steps to address problems, earlier rather than later. When we know what our breakeven point is, we should share it with the team so it can be a collective goal.
…we need to do the fundamentals better than we have ever done them in the past, and it all starts with sales.
Cashflow in the flooring industry can be a challenge at the best of times. In the new environment that is widely predicted, we might increase the amount of deposit taken from customers, and then we must ensure jobs are installed promptly and to a high standard so the job can be invoiced to get the balance of money in quickly . Every person has to be at the top of their game.
It would be wonderful if, by the time this article is published, I can look at it and be embarrassed because actually, things didn’t turn out so bad. I will be delighted to be embarrassed if that is the case. In the meantime, let’s hope for the best, but plan for the worst.
Read Part Two Here