Risk management during economic uncertainty
It would be out of place to start this blog without properly acknowledging all that is happening in the world right now. And while things seem uncertain, Focused Energy remains committed to ensuring our customers and readers are kept updated on developments affecting their business, finances and operations.
And while the challenges of each business are unique, we are all being impacted in some way by the current health and economic climate – whether that is through business closures, changes in customer demand that reduce revenues, supply chain issues or erratic operational execution and logistics.
These unforeseen changes create uncertainty which, ultimately, manifest bigger risks for businesses. These risks typically form in three areas: Operational (risks affecting the ability to operate or execute a strategic vision), Financial (risk to liquidity, credit, capital, etc.) and Compliance (risk related to legal or regulatory concerns).
Related reading: Importance of Healthy Transitions
As a business leader you must make the often-difficult decisions that drive your business forward in the face of risks and uncertainty. Effective leadership requires you to ignore the urge to freeze-up and despite feelings to the contrary, this is not a time to be short-sighted. The deepening issues facing our economy are certain to linger for some time into the future and if those surrounding you think everything will be back to normal within a week or so, they must be told to think again. We’re not saying that these times won’t be behind us one day, they will. One day. And managing these concerns now is critical to your business being in good shape – and thriving – when things eventually turn around.
As in life, our operations change management program is parsed in three stages: crawling, walking, and then running. Focused Energy employs these fundamental steps of life to drive your business towards elevated employee engagement, improved profitability, higher customer satisfaction and increases in revenue.
How to manage business uncertainty
- First things first: Ensure you, your family and your team are safe. The rules are changing frequently and keeping up with the recommendations from local, state and federal officials requires vigilance. Following mandates and practicing common sense is your best guide. And remember that once this passes, be aware of what you’re team will remember you for. Are you communicating clearly and with honesty?
- Review your cash flow: Review revenue vs. your expenses – how long are you going to be able to meet your obligations if there is a sudden reduction in revenue? Are there areas of expenses to cut or is this an opportune time for an increased spend on business development?
- Develop a business continuity plan: Weathering this storm, especially if it requires restarting a business, requires a plan. Can you stave off closure with a creative solution? Are there options for your business to stay open virtually? Can you find new suppliers or re-negotiate with existing ones? Can you change your business model to continue to serve your clients? Or can you pivot to new markets?
- Identify and prioritize key risks and uncertainties: This can be everything from being able to launch that new product to having sufficient capital to keep the business afloat. Take a hard look at your risks (and opportunities), and gain clarity as to where you need to concentrate your efforts.
- Plan for multiple outcomes: Spread your risk. Rather than trying to make the one right guess as to what will most likely happen, take multiple perspectives and create multiple scenarios as possible outcomes.
- Effectively allocate resources: Once your plan is in place, ensure you have the right people and resources in place to execute with excellence.
- Communicate, then communicate again: Communicate changes and strategies to all impacted stakeholders. Maintaining healthy relationships with employees, customers, and suppliers will ensure you can address challenges and pivot if necessary.
- Evaluate strategy continuously: There’s no substitute for awareness, listening, and detecting events as soon as they happen. Closely monitor your results and if your plan is not shaping up the way you thought or an unexpected opportunity opens up, don’t discount it out of hand. Modify your actions accordingly.
We’re here for you: business resources from Focused Energy
With each passing day, the news gives us something more to be concerned with. The devastation to our communities, to our families and to our economy is pervasive. To everyone who has been impacted by these challenging times we want you to know that we’re here to offer guidance. And we begin with this: Stay calm, stay grounded and stay informed. If you’re ready to speak, reach out to us and in the meantime, here are a few more thoughts to consider:
- Get support on your strategy – schedule a consultation at no cost to you
- Review expenses and revenue – download our free cash flow template
- Review priorities – download our free important vs. urgent matrix
FE can apply a data-driven, strategic approach to combat uncertainty and strategize.
If you need guidance on managing through these uncertain times, get in touch with us quickly and conveniently:
COVID-19 resources for small businesses
As businesses look for ways to address risks, more and more programs are being announced. Read through the details carefully to learn if any of these are accessible resources that help you navigate these challenging times:
- As a result of the signing of the CARES Act, the Small Business Administration (SBA) is offering Economic Injury Disaster Loans up to $2 million per small business, and business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan.
- The Trump Administration and Congress signed off on a roughly $2 trillion stimulus package to confront the new coronavirus pandemic. The package expands emergency loan access, offers direct payments to those making under $99,000/year and enhances unemployment benefits.
- The Families First Coronavirus Response Act provides emergency paid sick and family medical leave, while also offering tax credits to businesses that offers them.
- The Main Street Business Lending Program, a new initiative announced by the Federal Reserve, will complement SBA efforts to further support lending to eligible small and medium-sized businesses.
- The Main Street Emergency Grant Program (proposed by U.S. Senators Chris Murphy, Jeff Merkley and Chris Van Hollen) would allow small businesses grants through the Treasury Department.
- GoFundMe has partnered with Yelp to allow independent businesses to start fundraisers and accept donations through Yelp’s pages. The Yelp Foundation and GoFundMe also both pledged to donate up to $1 million to the GoFundMe.org Small Business Relief Fund.
- MultiState has compiled state-specific policy and resource information on the new coronavirus. Don’t overlook local resources and support options.
And remember, it’s natural to feel anxiety during any crisis, but you are not alone. Each of us is experiencing this moment in our own unique way, and we’re all feeling something in common and simultaneously. Be empathetic because whatever challenges you are experiencing, there’s no escaping the fact that we’re all in this together.