Monthly Archives: May 2020

Leading & Managing Through Crisis: The Path Forward

CBRT Teleconference Forum Notes

“Leading & Managing Through Crisis: The Path Forward”

April 24, 2020

Panelists

Paul Brinks, President & CEO of Koops, Inc.

Paul Hindelang, President of Results Systems Corporation

Jason Walther, President & CEO of Walther Farms

Jamie Clark, President & CEO of Clark Logic

 

Panel Topic 1: What can businesses do to get through this crisis?

  1. Determine whether or not your business is considered essential. Who do you serve? Are any of your customers or clients considered essential?
  2. Establish strong communication with your customers/clients. Call them to ensure that you understand what they are going through. This will accomplish two things:
    • It will help you to determine whether or not they will remain a customer during and/or after this crisis. Do they have the funds to continue buying your product? Will they still be in business at the end of this? Without checking in with them, you may be surprised to find out 90 days from now that you don’t have any customers.
    • Secondly, reassure your customers that they can rely on you for their supplies/services. Communicate what safeguards you have in place to protect the supply chain.
  3. Determine what areas will provide the most revenue. All industries are being affected differently. For instance, the food industry has seen a decrease in demand for products sold to restaurants, but an increase in demand for snack foods, potatoes, potato chips etc. Focus your efforts on the areas that will ensure cash flow.
  4. Get online. Prioritize this if you do not already have the ability to do online transactions
  5. Be innovative. Look for the opportunities in the midst of this crisis.
  6. It’s all about relationships. The relationships we build today are going to be what carries us forward.
  7. Continue on with business as usual as much as possible.

 

Question from Attendee:

Question: My company is a lighting & engineering firm. Since the shutdown, we have started producing PPE materials; however, we do not want to become known for that. How can we take this opportunity without losing our reputation as a lighting & engineering firm?

Answer:

  1. Clearly communicate your intentions to your customers. Establish that you are doing this temporarily.
  2. Protect your brand. Keep the original brand and mission in front of your customers.
  3. Watch your money flow. If you invest heavily into PPE and your customers start purchasing those supplies from you, you will be in the PPE business whether you want to be or not. Monitor your money flow closely to determine if you are getting too far off track.

 

Panel Topic 2: Revenue

  1. Determine which projects have the highest margin. Focus all of the energy in your company on that work.
  2. Consider liquidating inventory items. Sell it for immediate cash needs.
  3. Prepay contracts if possible.
  4. Agriculture has been in recession for 5 years, at least. It has forced companies to find every possible way to reduce fixed cost. So, even before the pandemic, that was a big priority. We budget, watch the cash flow very closely — at least monthly.
  5. In order to receive revenue, you must put the billings out there.

 

Panel Topic 3: Billings & Accounts Receivable

  1. Review your Accounts Receivable. Categorize them into three categories: A, B, & C.
    • The “A” accounts are those who will likely pay on time.
    • The “B” accounts are those accounts that you aren’t quite sure about.
    • The “C” accounts are those who are high risk. Work on the high risk accounts immediately to get as much cash from them as you can because, if they’re not in business 90 days from now, you may not get anything from them. Try to get as much out of them as you can while they’re still in business.
  2. Put tools in place to fully understand your cash flow. Review your customers billings from the stand point of 30, 60, 90 days so that you fully understand where the cash will or will not be.
  3. Know where your break-even point is. Look at this once or twice a month.
  4. Have a strong team behind you.
    • There is a completely different emotional behavior in AP vs. AR. Your team must be able to wear two hats. First, they must put on their hat to try to collect AR, then put on their AP hat which is deferring payments.
    • Take a team approach. Sales, business development, etc. all have different contacts and relationships with the customers.
  5. Strive for a commitment from the customers. Any commitment. For instance, the customer may be late, but can they pay half in 30 days? What about 20% this week? We may not get 100% of what we’re after, but something is better than nothing. Just continue to be sensitive to your customer’s cash flow needs, while communicating yours as well. Note that this is not something you can do on a monthly basis. In some circumstances, you may need to contact customers weekly or even daily.
  6. Utilize technology to help communicate and maintain timeliness.
  7. Stay calm. Have compassion. Remember that on the other end of the line is a person dealing with the exact same thing you are.
  8. Be flexible and creative. If you’re in real estate and a tenant can’t pay for the next 3 months, consider extending their lease by 3 months.
  9. “Proper preparation prevents poor performance.”

 

Question from Attendee:

Question: How can/should we be handling the government’s very one-sided response to COVID-19?

Answer: Koops, Inc. has a daily meeting to discuss all of these topics. We’re focusing on staying informed. What is the recent legislation coming out of Lansing? How can we work with our legislators? When appropriate, we have talked with them, sat in on webinars, and are trying to form a partnership with the government.

 

Panel Topic 4: How can we avoid layoffs?

  1. Consider reducing work hours. For instance, Koops, Inc. has reduced their hours from an average of 45-50 hours per week down to 36-40 in order to spread out the work and conserve. You may need to shift roles a bit to keep people busy, but this will help to keep the balance of protecting livelihood and health.
  2. Don’t make emotional reactions today. Stay calm and look long term. Don’t alter your company culture as a result of all of this.
  3. Clark Logic experienced something similar last April when two of their biggest customers decided to make changes. We can’t do anything about that. It was looking as we were going to have to lay off employees at that time, but we decided to reduce their work rather than laying them off completely. Remember, there are 26 million American’s laid off through this… Put your people first.
  4. Make sure your team is working on productive activities that will generate revenue in order to keep your company viable long term. Most people are not used to working from home and being self-starters, so it is very important to require your people to keep a record of their time. Have them record the date, time, and the amount of time they are spending on the particular activity. Is that activity billable or is it internal? This allows them to track themselves on whether or not the activity is truly beneficial.
  5. Review your processes. Look for opportunities to improve your organization. You may find that certain processes should not continue and should be eliminated when this is over.
  6. Automate as much as possible.
  7. Some businesses are starting their PPP program, but their people are not being productive or do not have any work. Is this viable long term?

 

Takeaways & Input from Attendees:

  1. There has been a lot of talk today about maintaining communication with your clients and suppliers. Do not forget about your banker. Make sure they understand exactly what you’re doing, your business model, and tactics you’re using to manage and work your way through this. If there is anyone who doesn’t like being surprised, it’s a banker.
  2. Many people are struggling with managing their employees remotely. My team is remote already. As a leader, you have to know your deliverables. You will be able to see whether or not your team is being productive.
  3. This circumstance is like a wakeup call to all of us. 1 Thessalonians 5:2 tells us that the day of the Lord will come like a thief in the night. In the same way, no one was ready or prepared for this. It shows that we need to strengthen our business practices if we haven’t already.
  4. Be creative. Status quo is not good enough anymore. We must be creative to evolve our business to the next level.
  5. Focus on viable work. One attendee has a customer who owes them a lot of money and has gone silent. Now they have to make the decision on whether or they should continue work on that customer’s product. We all must keep on an eye on these sorts of clients and make sure we don’t continue to throw money at an account when it is unlikely that we will be paid.
  6. Maintain the culture. In these situations, you can get a really good understanding on which members of your team really get the culture.

 

CBRT will be hosting another FREE teleconference forum on May 29th. Our topic will be “Current Challenges & Future Opportunities: The Road To Recovery.” If you would like to attend, please RSVP to Christa Moxon at christa.moxon@thebusinessrt.org. If you would like to sponsor the event, please visit our website for more details. We look forward to having you join us!