For a lot of businesses, the mass shutdowns of 2020 came with frozen budgets, delayed payments, furloughs, and fear. As the world continues fighting off a pandemic while thinking about what the future might hold, some entrepreneurs, organizations, and leaders are climbing out of the rubble and looking for guidance on where to go next. For some, the focus has shifted from day-to-day crisis mode to rebuilding for an eventual revival.
How can business owners not only survive this current period of instability, but eventually work toward recovery? “If we are constantly thinking, ‘This is the end of the world, this is the death of my freelance business or my agency,’ then it probably will be the death,” says Peter Czapp, cofounder of UK-based accounting firm The Wow Company. Instead, Czapp encourages asking yourself and your team: How can we turn this to our advantage? What aspects of our organization are ripe for change? And what steps should we be taking right now that we’ll be grateful for in two years’ time?
Whether you run a large agency or you’re a solo entrepreneur, the pandemic has almost certainly changed the way you work. Below, some suggestions from experts on how to not just embrace that change, but potentially use it to build something you’re even more proud of long after the dust settles.
Face the worst-case scenario head-on.
For Czapp, a critical first step in getting past the panic is facing it head-on. He recommends thinking through, in detail, each worst-case scenario that your business is up against. From there, he says, “You can start thinking, ‘Well, what would I do if that happens?’ And you suddenly start to come up with pathways, and it gives you clarity.”
Ask yourself: what happens if you lose your biggest client? What happens if that one big contract disappears? Run the numbers and see if there’s space to adjust your business accordingly. Maybe you’d need an infusion of funding—how much, and how quickly? Thinking through the nitty-gritty hypotheticals, rather than a vague cloud of what-if, helps take the anxiety out of decision-making.
Find a mantra
Think about a clear, simple statement that sums up your business’s approach to getting through this specific challenge. For Czapp, that guiding principle was about supporting their employees and helping them put their families first. Once articulated, that statement then became a guiding principle against which Czapp and his colleagues compared each and every decision they made, moving forward. “You just make sure everything you do supports that plan,” says Czapp. Say it out loud. Share it with the team. Review it weekly, and make sure your decisions align with it.
During a period of instability, it’s crucial to have important information readily available, organized, and as up-to-date as possible. For a small business, that’s especially true for financial information. “When things tighten up and suddenly cash flow becomes a little tighter, and your buffer reduces down from 3 months to 2 to 1, and you're just starting to wonder if you'll be able to make payroll this month, it's really important to have accurate information at your fingertips,” says Czapp.
Now’s the time to get cozy with your financials—with much more regularity than you may have done pre-crisis. If you did a deep-dive into the numbers on a monthly basis, then shift that routine to weekly, and if it used to be weekly, perhaps it now needs to happen daily. Having your finger on the pulse with accurate financial information will help you stay informed, make better decisions. If your financials aren’t quite that organized, consider investing in upgrading that area of your business — that’s one expenditure you can justify during financial turmoil.
Manage your cash flow, and adjust accordingly
The formula for managing cash flow during tough times is simple enough: Slow down or reduce what’s going out, and speed up or increase what’s coming in. But in the case of the former, says Czapp, it doesn’t have to be about stopping payments. “It's about working in collaboration with people, working with your supply chain, to reach successful conclusions,” he says. Meeting in the middle with your suppliers, your contractors, your landlord, to see if pausing or spreading out your payments is an option.
In turn, you may field similar requests from your own clients asking for discounts or hoping to extend the payment terms. Find a way to compromise. Offer the discount, but only in exchange for earlier payment, an extended engagement, or more favorable terms in the contract. Rather than letting a client sit on a large sum owed to you from a big-budget project, offer to break it up into smaller monthly payments, which are easier to pay. And make sure to retain some leverage if you can, adds Czapp: Don’t deploy a website overhaul or share files until after you get paid.
You’ve made it through a chaotic time, and now you’re standing in the rubble wondering how to move forward. Emerging from this, your work may not look the same way it did 6 months ago, and that’s OK—this is an ideal time for re-aligning your business to ensure it’s working for you. Here are a few things to think about, and perhaps rethink, as you work toward rebuilding:
Revisit your purpose
As an entrepreneur, you set out with a clear-eyed vision and purpose—and perhaps over the years, that vision took the backseat as life and business took over. Perhaps you started juggling projects you weren’t passionate about, or somehow strayed from your initial goals and intentions. For business owners and freelancers, it’s a tale as old as time. “But this time is a wonderful opportunity to reconnect with why you're doing this, what is your purpose, and how can you build something you're really proud of, and helps you fulfill something bigger,” says Czapp. “These situations force us to stop and think, what do we want? What's the purpose? What's going to make us happy and fulfilled? What business can I build that I'll be super excited about in 2 years?”
There’s also the chance that the work you wanted to do a year or 2 ago isn’t the same as what you find yourself pulled toward now—and that’s OK, too. Spend some time thinking about what that might look like, and what it might mean for your business. Then, you can make decisions that align with your current wants and needs, rather than retrofit them into old goals that no longer work for you.
Redirect resources where it matters
Kelly Vaughn, CEO and founder of The Taproom, works primarily with e-commerce merchants. In 2020, Vaughn says she’s witnessed merchants redirecting their efforts and energy from the in-store experience to online, whether that means perfecting their online experience or simply getting up and running. “I'm definitely seeing people recognize that the level of effort they're putting toward their website, their online experience, their email—the more they're spending time and resources on that, the more it's going to help them improve in the long run,” she says. “It's doing a little more preparation, as opposed to just being reactive to the situation.” For most of these businesses, it’s an opportunity to take a look at what’s been sitting on the backburner — like a more functional website, or a more direct way of reaching customers — and finally dedicate time, resources, and attention to it. These decisions, adds Vaughn, will benefit businesses long after the world moves on from the pandemic.
Do a little financial housekeeping
Jody Grunden is the founder and CEO of Summit CPA, which offers “virtual CFO” services to businesses. At this point, his firm’s clients are looking inward and asking what changes they can make internally to ensure they never have to repeat what they experienced at the beginning of COVID lockdown. Clients are using this moment to trim unnecessary expenses (see: Do we really need that big, fancy office space when the last few months have proved that remote work can work for us?), streamline their operations, and get serious about savings. (For the record: Grunden recommends socking away 10-30% of your company’s annual revenue, or 2 to 6 months’ worth of expenses, depending on your business’s risk level.)
But it’s not just about tightening budgets or trimming the fat—it’s about knowing where you’re headed, and how you’re going to get there. “Forecasting is the key to all of this,” says Grunden. He sees it as a roadmap, one that enables businesses to make decisions based on information rather than emotion. Even having one in place can help right the ship. “When you have the roadmap all filled out, it seems like people just automatically drift towards that end goal,” he says. “I would say if you don't have a solid cash forecast, where you're looking at cash, revenue, and expenses, then now's the time to put it together, and now's the time to look at it on a very frequent basis.”
Reassess your business model, your clients, and your culture
Maybe it’s the realization that, before the pandemic, you were traveling constantly just to stay in the black. Maybe it’s facing up to how dependent your business was on one lone client. Or maybe it’s simply waking up to the fact that you and your team offer a range of services, but half of them aren’t very profitable, one barely breaks even, and one isn’t really your team’s strong suit after all. As you work toward rebuilding, it’s a great time to assess those things, and then reposition accordingly.
Another area ripe for reassessing in a time like this: your client base. Czapp encourages asking yourself: when it comes to the types of clients you work with, where are you most fulfilled? Where are you most profitable? And what clients have the most value to you?
And if you employ people, there’s never been a better time to take a new look at your workplace culture. According to the Wow Company’s research, 75% of agencies surveyed in the U.K. said that they plan to have more remote working in the future, while only 16% said they planned to go back to the way things were. This presents a sea change not only in how companies work, but also how they hire. “Suddenly, you can hire not just the best talent within an hour's drive of your office; you can hire the best talent globally,” he says. Of course, that also means your own employees can go and get the best jobs globally, which means it might be a good time to up your retainment game. “We really need to think about how we manage our teams, how we manage our cultures, in an environment where we will be doing more remote working in the future collectively.”
Lastly: take a deep breath, and take your time
Recovering from this will be a marathon, not a sprint. As you eventually emerge from these challenges and look toward rebuilding, allowing yourself the time and space to make informed, clear-headed decisions will be critical — not just to the health of your business, but to your own health, too. “Give yourself time to think, process, plan, and strategize,” suggests Vaughn. “Block time off to sit and think: what is my situation? Where would I like to be? What is theoretically possible? And then put together that plan of action — once you have those goals written down in front of you, you're much more likely to actually reach them because you've truly thought through them.”
Written by Gray Chapman
Gray Chapman is a freelance writer whose work has appeared in the New York Times, the Guardian, and Atlanta Magazine, among others. She lives in Atlanta with her husband, son, and two poorly behaved but very loved dogs.