Managing an Industrial Business through COVID-19
These are incredibly uncertain times. Maybe your business is operating now or maybe you are shut down. As a fellow industrial / manufacturing business owner, I wanted to share 5 things that I’m thinking about right now that you may be thinking about too:
Employees – Employees are scared about job security and their health. Employees want reassurance on both fronts. You don’t know what to tell them because you don’t know how long the virus will last or the what the future business looks like. Ideas to consider: Take it day by day and week by week. If you are shut down, offer a period (2 weeks, if able) of full pay benefits. This gives you time to reassess cash positions, consider Federal/State loans/subsidies, and react to new changes if the economy reopens. If you are open but orders are slow, develop a compassionate plant to adjust staff and be sure anyone you furlough or let go understands the benefits available to them. Update and reassess as needed.
Expense and cash management – Revenue stopped or slowed dramatically (it’s going to if it hasn’t yet!). More so, you have multiple people placing purchase orders and cutting checks. Ideas to consider: Take control quickly! Require that all POs and payments are signed off by you. Immediately stop discretionary spend (consultants, marketing budget, non-critical vendors). One of our portfolio companies started funneling every single check through the CFO. You’d be surprised how quickly you can restart all of this stuff. Just remember, once you write the check, you can’t get the money back.
Communication – Everybody (and I mean everybody!!) wants to know what is going on with the company (employees, customers, suppliers, investors, lenders, etc). It feels impossible to keep up and keep everyone informed. Ideas to consider: Develop a simply and frequent communication plan. At one of the companies we own, we developed a list of every workers’ (office and production) e-mail and phone. We communicate every other day via text message (there are tons of cheap online mass texting tools) and e-mail. Remember, keep it simple and keep it frequent. One of the best parts of doing this are the responses you get – everyone is rooting for you and the business.
Going on the offense – You have a gut feeling that with all this disruption there must be some opportunities to further develop customer relationships, be there for a key customer, or even develop a new product or service. But how do you do it while just keeping the business alive? Ideas to consider: First, you need someone to own this – either your sales/marketing lead or repurpose an office worker who is working from home and needs work. Have he/she listen to customer needs (w/sales folks), understand competitors (ask customers what competitors are doing). Then start generating ideas – do you need to make more of a certain product? Can you make a new product? For example, a fabricator we know started making reusable face shields for hospitals. They received their first order for 500 masks in 2 days from a local hospital.
Preparing Post-crisis - I’m shut down now and don’t know how I’ll resume but know it will be busy because there will be a lot of order catchup. Ideas to consider: Ensure you have key raw materials / supply in stock (at least a month’s worth, if you can afford it), so you are not constrained to resume production. We have 2-3 months of our raw materials in stock. We can also learn from China. We have an Asian-based supplier who is about 2-3 months ahead of us in terms of dealing with the virus. The biggest issue for them, in terms of reopening, was having supply in place so they can make product. Everyone is “taking what they can get now” in terms of suppliers, so start securing supply.
Finally, take care of yourself, have a drink. This is a leadership moment, something that will define you as the owner / CEO for years to come. Don’t squander it. Give your team the facts, help them problem solve. We will get through this.
Best,
Josh