Your plan for recovery:
4 questions to ask
These considerations and yardsticks could help you position your company for better days to come
5 minute read
- Even amid uncertainty, a recovery plan can help prepare businesses for when conditions improve
- Assessing liquidity and other metrics can guide decisions about how quickly to ramp up operations
- Employee safety and the status of customers, supply chains and inventory are key considerations
Even as businesses continue to focus on immediate concerns, they’re also preparing for the economy’s eventual rebound. A recovery plan for your business will depend on the status of your customers, supply chains and inventory, says Brian Wright, Senior Vice President, Bank of America Centralized Commercial Credit.
You have to consider your metrics. How much has your demand been reduced? What is it today? And what are you hearing from your customers?
While your company’s size, your industry and where you operate — along with a host of other variables — will determine how you proceed, finding the answers to the following questions could help guide your approach.
1. What do your employees need most?
They’ve been essential to getting you through the downturn and are even more crucial as you pivot toward recovery. Have you had to reduce staffing — and if you have, do you have a plan for bringing back some or all of those furloughed workers? If most people are working remotely, how has that affected productivity and morale? And if you’re expecting to bring employees back to the office or the factory, how do they feel about that? “Some may be comfortable coming back — they’ll just take the necessary precautions — but others may be quite nervous and reluctant,” says Wright. Assessing the health, availability and comfort level of your employee base now, and considering how to create a safe physical environment and protocols for when they return, can help you plan and make adjustments as you prepare to gear up.
2. How can technology help fuel your recovery?
The pace of evolution in online behavior and buying habits has accelerated, and companies that are able to anticipate further changes may benefit. “If you’re a metal company, can your customers go online and order the steel they need without interacting directly with anyone?” Wright asks.
Investment in technological capabilities can help your business become truly digital and better equipped to compete in a post-crisis world. Are you using big data analytics to understand customers and trends? Are you migrating more of your operations to cloud-based applications and using robotic process automation to improve productivity? Are you enhancing cyber security to protect data handled by a remote workforce? Making technological upgrades while also scaling up your online presence and capabilities can help you operate at the forefront of a rebounding economy.
3. What metrics can help determine your way forward?
Revenue, expenses and cash on hand are critical under any circumstances but never more so than right now. How have supply and demand changed for your company’s products or services? How will those shifts affect your ability to ramp up production? “In every industry, the answers to these questions are going to be different, and the pace of recovery will vary, too,” says Wright.
But most important may be questions of current and future liquidity. “We’ve spent a lot of time with companies building out their 13-week cash flow forecasts,” Wright says. That information can tell you a lot about the flexibility you have in making key business decisions, such as how and when you bring back furloughed workers, whether other operating expenses can be reduced or paused and how you work with suppliers and customers.
4. What can the broader economy tell you about your recovery?
“There’s going to be continual updating, and frequent conversations with your bankers, your accountants and other advisors,” says Wright. Many of those discussions will involve liquidity needs. But your banker can also be a source of many other kinds of intelligence. How are other companies in your industry faring in this economy? How quickly is your region reopening and how will that affect demand from consumers and other businesses?
“We have a tremendous amount of information about what we’re seeing in various industries, as well as from economists,” Wright says. That can give businesses a broad perspective while also helping them drill down to what’s essential in their industry and location. Understanding local economic conditions and trends and what customers of similar businesses are asking for can help you fine-tune your recovery plans.
What can you learn from your customers
How they’ve fared and what they need can help you adjust your approach.
In a rapidly changing business environment, many companies may find that their customer base is evolving, and that could affect their recovery plans and lead to new opportunities. “You need to look at the nitty gritty information about your customers,” says Todd Saxton, Associate Professor of Strategy and Entrepreneurship at Indiana University’s Kelley School of Business. “What is that telling you about what your business needs to look like as the economy reopens?”
What do they need from you? If you weren’t already talking to your customers, this is the time to start. “Find out what they want you to do,” says M. Kim Saxton, Clinical Professor of Marketing at the Kelley School, who frequently collaborates with Todd Saxton, her husband. “Reach out and ask them how you can help them and what you could do differently.”
Do they expect new ways of doing business? If you sell to consumers, they’ve probably gotten used to online ordering and curbside pick-up. Business-to-business customers, have also grown accustomed to new conveniences. Now companies have to weigh whether temporary changes will become permanent and how that will affect costs and revenues. “You have to decide what the new normal looks like for your company,” says Todd Saxton.
Have they “crossed the chasm”? Kim Saxton points to companies in industries such as telemedicine or e-learning that have suddenly taken off, and she believes that businesses considered crucial during the pandemic could continue to experience rapid growth. “If you can do it without shifting away from your core market segments, consider whether you could expand by directing some of your efforts toward these customers,” Kim Saxton says.
- Business continuity planning
Brian Wright, Senior Vice President, Bank of America Centralized Commercial Credit
Todd Saxton, Associate Professor of Strategy and Entrepreneurship at Indiana University’s Kelley School of Business
M. Kim Saxton, Clinical Professor of Marketing at Indiana University’s Kelley School of Business