Step 1: Survive
It’s not an overreaction to say that you need to survive as a company. Client cuts are real. Scope of work being reduced is real. Decrease product sales are real.
Brick-and-mortar businesses having little/no revenue stream is commonplace as the lock-down eliminates the foot traffic they so heavily relied upon. People all over the world are not spending as much; instead deciding that cash is king and they’d prefer to hang on to theirs.
And let’s get one thing straight:
Lack of cash-flow is a company-killer, plain and simple.
Especially to those of you who are just getting started and/or rely on your revenue stream to pay yourself, pay your bills and pay any staff you may have.
In an ideal world, you’d have a nice lump sum tucked away in a savings account to see you through this. But most are not in that position.
Most are boot-strapping and rely on receiving payments before you can make payments. We’ve all been there.
Whether your business was running smoothly prior to all this or not, the sudden shock of decreased revenue–and the subsequent ‘new normal’ (be prepared to get sick of that phrase in the very near future)–means you need to enter survival mode.
This type of sudden shock is also a company-killer.
So, what to do?
1. Make a plan
Sounds obvious and maddeningly simplistic. But it’s an important process for one main reason:
It removes emotion from the equation.
There will come a time – maybe it’s come already – when sales will drop off or clients tell you to stop all work.
That news feels like a punch in the gut.
The cocktail of disappointment, hurt, fear, anger, uncertainty and helplessness can be overwhelming.
Having all those emotions swirling around will cloud your judgement and lead to you making knee-jerk decisions or overreacting.
Lost revenue isn’t irreversible. But the decisions you make as a consequence of lost revenue can be.
If you have a plan set out beforehand, you could save yourself from catastrophic decision making errors that do long-term damage.
But there’s no need to make this a veritable tome – a brief outline of the actions you’ll take if you lose x number of clients, or your revenue drops by x percent will suffice.
The important consideration here is to make a plan with cool precision and well thought-out clarity, versus hysterical reactions in the heat of the moment.
2. Talk to your clients/customers
Can you help them? You’re in survival mode, sure, but that doesn’t mean you should think selfishly or with short-term objectives.
If they’re a client you value, perhaps you could continue your services without invoicing for now. Maybe agree to a payment holiday and spread the missed payments across the rest of the year.
That can help you in several ways:
- You boost your reputation and your relationship with a valued client by acting in their best interest
- You’re likely to win their loyalty by helping them through a difficult situation
- You continue your work for them, which is good for your routine and self-esteem
If you’re able to, this simple act will endear you to your clients and will likely lead to you retaining some you may have otherwise lost.
On the other side of the coin, can they help you?
If they’re cash rich (even relatively so), would they agree to pay upfront instead of spreading payments across the coming months?
You could offer a discount to incentivise this, making it a win-win for both of you: you improve your immediate cash-flow issue and they get a discount on something they were planning on paying for anyway.
Alternatively, you could ask regular customers for pre-sales.
We’ll all need a haircut when we can finally leave our houses again – if your hairdresser asked you to help them out by paying now for a haircut you’ll definitely redeem in the future, I’m confident you’d say yes. I would.
So, apply this concept to your product/services and start speaking to your clients.
Regardless of the approach you take, the more information you have, the better you’ll be placed to find solutions. Talk to your clients and think creatively.
3. Use the restrictions in your favour
Last week, I spoke briefly with someone who runs a visa application company.
As you can imagine, his business has hit the wall because no one is travelling anywhere.
I made the following suggestion:
Are you able to offer pre-sales to people who plan to travel when this all blows over?
Something along the lines of:
“There’s going to be a big, mad rush for visa applications when the travel restrictions are lifted. That means huge backlogs and long waiting times. We can make sure you’re at the front of the queue by starting the process today. Pay now and, as a way of saying thanks, we’ll prioritise your application when things are back to normal.”
This is a concept that will work for many industries.
Aside from the visa applications and hairdressers mentioned above, how many people are going to want to throw a huge party as soon as they can because they missed their birthday/anniversary/baby shower etc.?
Businesses that hire-out their premises should be offering bookings now, if only to avoid the huge and sudden influx in the future.
As long as the cancellation terms are flexible enough to make it risk free, it’ll not only ease their cash-flow issues, it also ensures future business and, as a welcome bonus, will give people something to look forward to.
Think outside the box and use this situation to your advantage.
4. Offer free trials and experiments
Were you recently trying to upsell a client on a new service? It would seem like that idea’s in the toilet now… but maybe not.
If it’s something you think will definitely work (i.e. you weren’t upselling for financial gain only) then tell them you’ll do it now, for free. You’ll likely find that people are presently more open to experimentation.
If your suggestion proves to be fruitful, you can charge them more in a few months’ time because you can back up your suggestion with data proving your results.
Remember, survival isn’t just about the next few weeks. There are ways to keep things ticking over now and have even more business in a few months’ time.
5. Operate ‘at cost’
Based on the assumption you have a profit margin built into each sale, running ongoing promotions which reduce the price to the customer can help you stay operational.
By sacrificing your profit margin in the short-term, you should be able to increase volume which will allow you to pay yourself, your staff (if you have any) and your bills.
But be careful with this tactic – extended sales can devalue the product in the mind of the customer in a way that’s difficult (if not impossible) to revert.
If your profit margin is so large that selling products ‘at cost’ would make it difficult to justify a return to the regular pricing, then act cautiously.
Customers are not stupid: 90% discounts can make them think “why were they charging so much in the first place?”
6. Tighten your belt
We’ve all got services we don’t really use. Or if there are some we use occasionally, they often don’t justify the subscription fee we pay. They seem to build up in the background without us even realising.
Well, now’s the time to cut!
Go through them one by one and really evaluate their necessity. If you can run your business efficiently without them, they’re gone.
Be ruthless. This is what survival mode looks like.
However, an important consideration:
Large, faceless corporations are easy to cut (do you really need Netflix, Amazon Prime Video AND Disney+??)
If you have personal relationships with them however, you need to treat it more delicately.
It’d be hypocritical in the extreme if you asked your clients to stay loyal to you during these difficult circumstances, while simultaneously walking away from every small business you currently pay money to.
In these circumstances, I’d recommend approaching them the way you wish your clients would approach you.
Tell them you want to help them and stay loyal, but that you need some help to do so.
Ask for a payment holiday. Ask if you can pause for a while. Ask if they can do it free for a couple of months.
Try to reach an agreement where they can help you somehow so the relationship isn’t soured.
Cut expenses, not investments.
(No, we’re not talking stocks-and-shares type investments here).
Don’t keep the car and cancel the group networking membership if that group regularly leads to customer acquisition.
A cheaper car will still get you around. Leaving the group may hit your revenue stream a lot harder in the long-term.
Likewise with staff – don’t release a valuable team member so you can pay yourself a little extra, just because it’ll make you feel more comfortable.
Survival decisions are meant to factor in the times after a crisis, not just short-term relief.
7. Explore credit options
This will differ depending on the country you’re in, but several governments, banks and/or credit companies around the world are offering payment holidays, removing interest rates or providing access to funds via loans or grants
These should not be ignored.
Do not be afraid of accumulating debt (especially low interest debt) right now in order to survive.
You can either be a debt-free company that goes out of business due to a lack of cash-flow or an operational company with low interest debt.
If you care about your business, it’s a no brainer.
Step 2 – Attack
Under no circumstances should you use this as an excuse to crawl under a blanket, pop Netflix on and wait for it to all blow over.
This is an opportunity.
And there’s no need to feel guilty about making money at a time when the collective world is seemingly struggling.
You can either fall in line and start struggling yourself or you can be productive.
There’s a huge difference between making money FROM a crisis and making money DURING a crisis. The former is unscrupulous. The latter is made up of all the companies who are going to survive this.
Adjust your perspective and see the opportunities where, on the surface, things may seem negative.
If you have less clients now, that means you have more time. Are you selling less products? Then it’s the perfect time to research alternative ones or cull your weaker offerings to make your selection more targeted (less is always more, unless your last name is Bezos).
1. Be productive
If you’re suddenly subjected to a changed working environment (working from home, kids suddenly around instead of in school/childcare etc.) you need to understand your own working habits.
The best thing you can do is to keep the same routine as before.
Don’t suddenly begin getting up at 5am just because you read an article saying all highly successful people do that, if you find yourself flagging come midday.
But also, don’t sleep in if you normally wouldn’t. And keep the same bedtime, your circadian rhythm is sensitive to such changes and difficult to re-adjust.
Also, make sure you get dressed into proper clothes. If you work in your pyjamas all day, just because you can, you’ll find it increasingly difficult to unwind on your days off.
You’re already working and relaxing inside the same four walls. If your clothes don’t change as well, you’ll lose the satisfaction of changing into something more relaxing when the work day ends.
And put on your shoes when it’s time to work, NOT your slippers (trust me, that small change alone will do wonders to focus your mindset).
Have you thought about pivoting the services you offer or trying a new target market?
If so, now’s the time to at least research it. And if there’s a natural fit for you to access part of the market which is benefiting from these new circumstances (think: food delivery, at home entertainment, even ahem sex toys) then now’s the time to implement!
But make sure you think about the changing needs of your existing customers (don’t guess – actually ask them what these are!) rather than starting from zero with something you have a hunch about.
It’s easier to cater to people who already know, like and trust you than it is to reach a brand new audience from scratch.
3. Consider tweaking your existing offerings
Ask your clients/customers what they find most valuable about your products or services. First and foremost, you might be surprised at the responses.
The ultimate aim of this is to find out what, if anything, could be removed without them experiencing a noticeable difference. By doing so you may be able to streamline your output and still charge the same fees.
Alternatively, ask what they’d like more of. Maybe you’re under-delivering a certain element that they value more highly than you realise. Can you do more of the same and increase your fees accordingly?
4. Consider a side project
If all else fails with your existing revenue stream, this is certainly an opportune time to try something completely new.
Just be aware that getting things up-and-running can take time. And it’s meant to. Don’t rush things in order to get it in front of people. That’s usually a recipe for disaster.
Imperfect action is better than perfect inaction, sure.
But there’s a difference between getting something out there that’s been researched and well thought-through, but isn’t quite 100% perfect, and skipping the foundation work entirely just so you can start charging people for your new thing.
Research your idea, validate it using your existing network, tweak it to suit the feedback you get, get a small handful of people to give you money for it… then, and only then, can you be confident of generating some solid revenue from this new venture.
5. Take a course
OK, I’ll be upfront here:
I’m about to launch a digital marketing school so there’s a slight ulterior motive to this addition.
(I have at least listed it last to offset that!)
Regardless of my personal opinion on our courses however, your continuous self-development and ongoing education should be a priority.
Personal growth is, after all, central to many psychological theories of long-term happiness.
So, if you’re in the rather luxurious position of not needing to re-engage lost clients, pivot your business offerings or start a side hustle, I’d recommend you taking up a course in anything at all you find interesting instead of browsing your phone all day or ploughing through series after series of on-demand TV.
Your very happiness depends on it!