Considerations for Small Business Owners, CEOs, and Executives
When the World Changes, Change the World
Dear Members of the Brooks Financial Group Family,
No one could have predicted the coming of COVID-19, or the impact it would have. Many of us have already been personally impacted by the pandemic, and all of us have certainly felt the stress this type of unprecedented event brings. Clearly, the impact of this coronavirus extends far beyond the financial realm, putting the health of those we love at risk. At Brooks Financial Group (BFG) we want all of the relationships in our care to know we are here to support them in any way we can – with information, encouragement, messages of hope, and of course, with prayer.
“We know that affliction produces endurance, endurance produces proven character, and proven character produces hope.” Romans 5:3-4
Certainly, we hope the conditions improve and our nation recovers quickly. I see winds of a “new normal” that can be applicable and beneficial to all fronts- Our Families, Our Enterprises, Our Nation, and Our Economy. Our country is taking brave steps to keep its citizens safe and while some are working on relief packages, and mandates to protect us, others are working on trials, treatments, and vaccines. Each of us, whether running a family or business, should brace themselves for the turbulence that inevitably seems to lie just ahead. It is a time to prepare for the many scenarios that could play out in the weeks or months ahead.
News channels continue to inundate us with suggestions for precautions to take in order to keep yourself, your families, employees, friends, and community members safe from COVID-19. At BFG, we too have studied the information available and maintain close ties with those in the community who are on the front lines, managing the spread of this disease. We would be happy to share our point of view – simply let us know if that is of interest.
This note, however, has a different purpose. We want to do whatever we can to help ensure the health of your business while dealing with the mounting consequences COVID-19 has brought to the marketplace. Many companies are facing the growing challenges and adverse effects of this virus has brought, including:
- Decreased business activity and productivity. Some companies have seen their business traffic and as result, growth rates dropped sharply between December and February. As of this writing, several states and cities have shut down all but the essential. The State of Maryland has closed or placed limitations on business and communities to “stay in place”. Organizations that were on track with their goals are now restructuring their mindset as they come to grips with what the new reality may be as the virus tightens its grip.
- Supply chain interruptions and stress. For the many businesses who rely on goods, COVID-19 is not only impacting their ability to produce goods, but it is disrupting supply chains globally as well.
- Travel bans and canceled meetings. Many companies have banned all “non-essential” travel. Additionally, the President, Administration and Congress have made many moves to restrict the spread of the virus, protect our communities and support our closely held business owners. While companies associated with any aspect of travel are directly impacted, all businesses that depend on face-to-face meetings for successful sales, business development, or partnership discussions are forced to find a new normal in virtual meetings. At Brooks Financial Group, we have a detailed Catastrophic Business Protocol Plan that has been put into motion and includes mandatory virtual workplace and virtual meeting interactions.
It could take a considerable amount of time for COVID-19 to be contained, but its effects on our nation and the global economy will take much longer to recover from. While the government is lowering interest rates, extending loans, and considering stimulus packages, these options will only touch the surface for those dealing with the economic ramifications a global health crisis of this scale brings.
Having faced economic threats and challenges to business behavior from past experiences and having digested the many economic forecast resources at our disposal, here are some broad steps that all CEO and Executive Teams should consider and stress test.
- Liquidity Resources and Debt Management. What is your ability to survive a catastrophic business interruption period? Is your balance sheet strong and do you have liquidity facilities in place? If the economy sputters, do you have contingency plans and resources? Where could you trim expenses without fundamentally hurting the business? Discuss with your banking and financing resources what options exist for new, interim terms or pauses in capital funding repayments and interest. These are but a few examples of the many questions that business owners should be asking and attending to today. Doing so now and reviewing decisions in a fluid manner as the situations continues to unfold, may help you avoid potentially painful future consequences.
- Sales forecasts. Even if you don’t see any direct or immediate exposure for your company, times such as these force a change in human behavior and as an extension, spending habits. What you understood as “normal business function” is over and you must spend time considering the facts of the new world, gain insights from business development partners and resources, assemble a trusted team to assess and measure all dimensions of the matter and create a plan of action that is then actively assessed and measured to produce the outcome desired. .
- Communication Is Essential. Now is the time to be in touch with your client/customer communities and suppliers. In times of trial- especially those that force demonstrative and sudden change- customer lifetime values also change. It is vital to the success of any plan adopted in order to face an unknown situation that a communication plan is in place that speaks to and demonstrates your leadership and voices your calls to action in times of change.
- Your Stakeholders. Without questions the thoughts and ensuing decisions that affect your employees are the toughest for business owners and their leadership teams to make. And yet, all angles must be considered. Practically, can you do more with less? No business wants to negatively impact the employment of others, but given the picture of the economy and the financial strains that lie ahead, now is a critical time to evaluate the personnel in your organization and make the tough decisions necessary to balance productivity, payroll, and revenue.
- Capital spending. Unless you have charted a course and obtained financial independence, it’s time to examine whether your capital spending plans are sensible, in light of this global crisis and looming economic impact. It’s possible that your plans can stay intact. For some, changing circumstances could even present opportunities for growth. Either way, it’s important to consider – or reconsider – your plans for capital spending.
As news of the pandemic continues to evolve, be sure to stay tuned to local and national coverage, relying only on trustworthy news sources.
Since 1992, Brooks Financial Group has been helping companies, individuals, and families weather challenging financial times and we’ve learned an important lesson — nobody ever regrets making fast and decisive adjustments to changing circumstances. Benjamin Franklin said “Change is the only constant in life. One’s ability to adapt to those changes will determine your success in life.” As a business leader you understand the value of planning, assessment and measurement. Now is a time to incubate with your teams and advisors, new thought paths required for new times. Enduring companies are change makers, ready and willing to adapt in moments such as these. Be a champion for your employees and avoid the traps of “inaction” and of false optimism. Both may lead to irreparable harm. The realistic, decisive leader will win the day.
Blessings to you this day and all days.
Michael O. Brooks
Chairman & CEO
Brooks Financial Group, Inc.