David Gens of online lender Merchant Growth gives his advice on managing a business during a crisis
Some useful tips for these difficult times
Never in modern history has the stress level for business owners been as high as it is today. I believe that almost every small business across the globe is in some form of crisis management. Some have the good fortune of being in industries that are performing well despite the COVID-19 pandemic. However, even they are having to scramble due to rapidly changing circumstances.
I run a Vancouver-based financial technology company called Merchant Growth that has provided hundreds of millions of dollars in capital to Canadian small businesses over the past decade. Going through my own crisis management experience, as well as hearing from our clients and what others are saying, has helped me clearly boil down the top three priorities that small business owners should be focusing on:
1. Do everything you can to ensure your survival
Make sure you can outlast the crisis and still be in business once it’s over. This is self-evident, and any business that has been significantly negatively affected by COVID-19 is already thinking through survival decisions. This includes cutting expenses, hoarding cash and tapping government programs (with so many being rolled out piecemeal, staying on top of all of them is a job in itself).
Besides doing the basic things like cutting expenses, it’s important for small business owners to do a good job of communicating with their priority creditors. Those could be landlords, banks, fintech lenders, equipment leasing companies or key suppliers. A relatively simple exercise, keeping your priority creditors happy involves these actions:
- Over-communicate: be proactive, reach out in advance if you need payment relief, and communicate constantly
- Be transparent: clearly articulate your challenges and the decisions you are working through, show your data and analysis, and explain all potential outcomes
- Work together: brainstorm solutions that work for you and your creditors
2. Use your beliefs about the future to drive your business strategy
Once you feel that Step 1 is under control and your near-term survival is more certain, you can turn your attention to business strategy. In the face of such rapid change, there’s no playbook, and historical data can’t inform your decisions because the world is now so different. Doing nothing isn’t an option because you’ll fall behind the competition. Doing many things in a panic could result in spinning your wheels and inefficiency.
In this situation, I believe the only approach is to establish your beliefs about the future, and then make strategic bets based on those beliefs. For example, a simple belief might be that customers will want to come back to your restaurant for a dine-in experience, as long as you can prove that they’ll be safe from the virus. You can do this by building plastic barriers, having hand sanitizer at each table and ensuring that your staff wear masks. A more complex belief could be that you believe many of your competitors don’t have the financial ability to survive the crisis, so you need to position yourself to capture market share when the economy rebounds. This could lead you to diversify your suppliers or double down on digital capabilities to reach more customers.
Because these beliefs aren’t based on data, it’s important to constantly revisit them and update your strategy if things change. Using this approach, you can not only survive a crisis but to use it as a catalyst for growth.
3. Take care of your team and engage with them
This step doesn’t come after the first two. You should do it no matter what, and no matter how dire the situation or outcome is. If you must let people go permanently, do what you can to support them and help them land on their feet. Check in with your employees and see how they’re doing regularly. It’s a difficult time for everyone. Doing this is not only the right thing to do from an ethical perspective—it also makes good business sense, because a business is only as strong as its team.
Earlier I mentioned that in crisis, we’re forced to make bets based on uncertain beliefs, and that those beliefs require constant revisiting. Your team should act like a truth-seeking debate group. If you’re developing your beliefs all on your own, you may fail to consider something important. By encouraging discussion and welcoming dissenting views, your team can be a great sounding board and help get your beliefs as close to the truth as possible.
We’re living in strange times, and they’re expected to stay strange for a while. Nobody knows exactly how things will play out. But the world isn’t ending—it’s dealing with a pressing issue and evolving to do so. As business owners, we have no choice but to evolve with it. Leaders all over the world—not just business leaders but political leaders, too—are making big decisions based on beliefs, with little data to support them. Eventually, things will quiet down. But for the time being, we have to trust our gut.