A contributor from the Association for Consulting Expertise advises a reader on how to deal with a challenge more and more businesses are facing in the midst of global health crisis — financial crisis.
Q: My company is in a financial crisis. What do I do?
ACE Advises: Our current situation with COVID-19 and a virtual shutdown of businesses certainly is an economic as well as a health crisis. But businesses come to the point of crisis all the time for many reasons: Customers move to a new competitor, the manufacturing recipe seems to be lost, or perhaps the new products are not getting traction as the old products are ending their life-cycle.
When your company has a problem, there are many tools you can use to help define solutions, such as root cause analysis and the 8D problem solving framework. But when the crisis is a real and potentially existential risk to the business, consider the three-step process outlined here.
- Determine the current financial situation. Setup a cash flow analysis for the next 13 weeks to understand just how much time you have to make a shift, get funding or further reduce costs. This cash-flow analysis can be supplemented by modeling scenarios to define best and worst cases and define trigger points for action.
- Identify what can be done to make the company as robust as possible in the short term. Are there alternative channels? Can you re-purpose products or manufacturing capability for new demands? What might change cash-flow scenarios?
- This crisis will end. Now is the time to envision what the business climate, customer buying patterns and channels might look like once it is over. How can the company be positioned to best take advantage of the new world order?
Terry Johnson is a business advisor and manages the Maine Mentor Network for the Maine Center for Entrepreneurs. He focuses on helping organizations get the help they need, define robust business models and to drive innovation. His website is www.practicaldecisions.com and he can be reached at terry@practicaldecisions.com