Tuesday, April 28, 2020

Restart, Then What?

Restart, Then What? 

[Editor's Note: We are all consumed by questions. It seems that every newscast and article is littered with questions...but no answers, because no one really knows. Anxiety and uncertainty abound. Some folks hope for the best; some fear the worst. It seems that asking many questions is a positive - as long as we plan to be adaptive as the future plays out. I hope you find the following article useful.        -dpm]
We are consumed by questions.
  • How pervasive will the Covid-19 pandemic be. Will it persist or resurge into the fall and flu season? Will it persist in 2021? Will there be definitive antigen tests to show who is resistant? When will a vaccine arrive?
  • Will my family and employees be able to stay safe and healthy?
  • How do I navigate my business through the health guidelines of social distancing, remote work? How will I need to configure the work space?
  • Could I take advantage of PPP and loan programs? How can I continue to conserve cash? Can I hold on to my key employees if they are furloughed?
These are questions every person and business person is asking and rightly so. Many small and lower middle market - even a number of larger - businesses are concerned with survival
What will the future look like? As we move through the coming weeks, we need to be looking at different views of what the future will look like. Everyone is focused on a restart. How we do that is critically important, but then what?
We wrote in 2009 that the economy was not going to "come back," because after each major recession, there are changes to behavior, expectations, and how we do business. And there were changes, regulations, etc., that impacted our business life. We adjusted. In many cases, it took several years to fully recover.
Because this pandemic has affected our health, our sense of security and safety, and our social habits - in addition to extreme damage to our economic health, it is much different than previous economic downturns. What will be the impact?
  • The recovery - will it be V-shaped, U-shaped, L-shaped .... or "Bathtub-shaped" (that is, a long U)
    • How fast will the recovery be? What will be the lingering effects?
    • How will the effects of the pandemic affect the way products and services are delivered?
    • What will our workplaces look like?
    • How will your business and your industry be changed?
      • Customers that once thought nothing about gathering at meetings, conferences, sporting events, restaurants, theatres, dealerships, etc. will now be less willing to assemble. How long will this last?
      • What will be the condition of your customers financial health, your suppliers financial health? How will it affect their spending habits?
        • Even if your products and services are B2B, what about the customers of your customers?
    • How will the sales process change?
  • With multiple trillions of liquidity into the system, what will be the impact on inflation?
What are the opportunities? Yes, there will be opportunities.
  • Opportunities to acquire companies that bring new business lines, new products.
  • Opportunities to bring in talent
  • Opportunities for new products and services that will accommodate changes in lifestyle, workstyle
Beware of unintentional changes to your culture. Many company cultures changed during 2008-2012 - they became "risk averse." Organizations rewarded those who were adept at cutting costs, avoiding risk, inwardly -focused.
In 2014, we were sitting in a client executive team meeting where the company was discussing a possible acquisition. This acquisition was a company that offered a complementary product line, had strong financials, a solid management team - and the price was reasonable. A great fit and the timing could not have been better.
One after another, the members of the executive team went around the table and each expressed doubts and reasons not to make the acquisition. The company culture had changed over the previous several years. They missed an incredible opportunity. A competitor made the acquisition and over the next several years emerged as a dominant player.
Need for Scenario Planning. Organizations need to be developing different scenarios of what the future might look like. We cannot predict the future - whether it be the balance of 2020, 2021, or the longer term. We need to evaluate different views of the future so that we can plan to be quick to adapt as a possible scenario unfolds.
Mitch Daniels, president of Purdue University just announced that he wants to open the university for the fall semester with a variety of scenarios and plans for doing so. Whether you agree with his logic or not, he said that we cannot afford to wait to see what happens; we need to put plans in place so that we can be prepared.
Hope is not a strategy. Waiting for things to pan out will leave us unprepared and behind the curve. Good leaders are planning out multiple scenarios so that their organizations can move as things evolve.

We can help The Mead Consulting Group has been helping companies with scenario planning for many years. Prior to the 2008 downturn, it was mostly our largest clients that did scenario planning. Since the 2008 "black swan," many more of our lower middle market companies began to see the benefits of scenario planning.
We are conducting complimentary introductory meetings about scenario planning. If you would like to discuss how we might help your team, please contact Dave Mead at (303) 660-8135 or meaddp@meadconsultinggroup.com

Stay safe and healthy!
Best regards,
Dave Mead 

No comments:

Post a Comment