Strategy and Finance
1. Liquidity: It is our most important measure. Do what we can to build or maintain liquidity. The lower the level of liquidity, the more important it is to make it go as far as possible. Liquidity allows us to buy time to figure out what a profitable business looks like coming out of this unique and challenging downturn.
2. Our people: They were key in getting us where we are today, and they will likely be more important than ever. While we are still trying to manage liquidity, even if it sometimes impacts liquidity, our people and their well-being are side-by-side with liquidity. The people that may not get to carry on remain worthy of how we can help beyond the layoff. Try to stay mentally active on what more could be done to assist them.
3. Adversity: Jim Myers always shared that until we have seen someone respond to adversity, we really may not know them. It is when we are up against adversity that we get to learn who someone is. The bigger the event, the more bold the world will be yearning for our actions. Ask ourselves what that means to us and like many are already doing, show us who we are.
4. Strategy: Recognize that as a problem gets bigger, it sometimes frees us to make a bold decision that otherwise, we would have never made. Often, what we've seen is that the CEO does some things that attempt to offset the problem. But to solve a big problem, we can’t just go halfway, or even 3/4 of the way. Our response must be bold enough such that it creates the results we are looking for. While the risk-reward component of our decisions has increased, what we don't want is to offer something that is helpful to the customer and reduces our resources but does not create the desired outcome. Evaluate how bold we must be and whether we can finance this to get there. Oh, the judgment calls that are required of the CEO and top leaders, heh!?
Below is the input given by members of CEO Forums on responding to today's world financially and otherwise.
1. Act to "get ahead of it" (whatever "it" is for you)
2. What fixed costs might we be able to cut? Fixed costs have a higher premium when cutting as it reduces our breakeven point.
3. What other expenses might we be able to cut?
4. If we can stomach it, try to prepare a conservative case and a worst-case of revenues for the next 90 days and see if the losses can be funded. Solve to be able to fund losses.
5. Who might be willing to pre-pay on a future service or project we plan to fulfill later?
6. If we do have enough liquidity, consider who we might reach out to and pre-pay. Which of our suppliers or service providers could use the help and we know we are going to want to use them on something in the near future?
7. SBA funding, from Jeff Amerine:
"Please keep sending people to the survey link. That will give us an email database that we can use to make sure they all get accurate instructions on how to apply and what to do next." https://www.surveymonkey.com/r/JB69D29 Startup Junkie is assisting the Mayor’s office of Fayetteville to collect this data. Start-up has over 500 responses and Jeff said some of them would make you cry.
Thank you, Jeff Amerine and Start-up Junkie.
8. Great advice from Porterfield and Company, Accountants and Advisers: https://porterfieldcpa.com/2020/03/covid-19-best-practices-for-businesses/
Thank you, Tom Porterfield.
9. Great advice from CFO Network on Recession Readiness: https://www.cfonet.biz/post/recession-readiness
Thank you, Allen Engstrom.
10. A presentation from Bain & Company to CEOs given the COVID-19 crisis: Click Here
Another quality resource from Josh Smith, Metova. This deck is a quick read and worth reviewing. The main takeaway is "prepare for the worst" and have contingency plans at a couple of levels in the downturn.
Thank you, Josh Smith.
11. As we began to process things in forums last week, it was a thing of beauty to see the depth and quality of resources that came forth from our members, friends, and other engaged leaders. Please find the best 12 of these resources that can help all of us better navigate HERE.