The Covid-19 pandemic changed so much about our world. How we socialize, learn and operate our businesses saw major changes in the last two years. Fortunately, some of the restrictions that were imposed at the height of the pandemic have been relaxed. But there are still lessons we can take from the pandemic to help our business-owning clients (and ourselves) weather future disasters.
As advisors, we have a unique platform to impact our clients’ lives. Part of that is helping them mitigate the risks they face in their personal lives and in their businesses. Therefore, it’s important that we address some of these changes to reduce the risk that comes with the next disaster, and to look at ways we can help them position their businesses to succeed.
Identify Solutions and Work to Improve
In my own firm, we work with a lot of entrepreneurial doctors, especially dentists. The closures were exceptionally difficult on dental practices. In fact, I know of some practices that were not allowed to see patients for nearly five months. As a result, I was inundated with otherwise successful clients reeling and uncertain what to do. They were struggling with what they would do with their employees (furloughs, lay-offs, etc.), how they would keep the lights on, and even what they could do to remain busy during the interruption.
The first thing to remember is that these are real people with real problems. There’s a delicate balance of carrying their burdens with them and helping them find their way through the problem. During that time, I held many meetings with business owners across many different industries. They poured their hearts out to me, sharing their fears and concerns. Once I heard them, I helped them identify solutions to their problems.
Begin by helping the client assess their business. What does it do well? Where is it lacking? Are there opportunities that have been created by the closure? Beyond the current disaster, what are the biggest threats to their business? Essentially, you’re going to walk your client through a SWOT analysis to leverage their strengths and opportunities. Additionally, look for ways to mitigate their business’s weaknesses and any threats it may be faced with. If your client is reluctant to do this, explain the practical value in it.
Rather than focusing on the external factors that they cannot control, this approach empowers your client to position their company for a successful return. By using the downtime to work on their businesses, clients could improve operational efficiencies, adding to its value and profitability when things return to “normal.”
Be Willing to Adapt
One of the more popular fast-food restaurants, here in the south, is Chick-fil-A. Before COVID-19, they were well known for quality food, excellent customer service, and one of the most efficient drive-thru services ever existed. Although none of these things changed as it worked through the pandemic, the company made the decision to accentuate what was already working.
With consumers growing more hesitant to venture into spaces where there may be larger groups of people, Chick-fil-A had to reassess its business model to make smart changes. Rather than risking the safety of its customers and staff, they decided to temporarily discontinue their dine-in service. Instead, they leaned into their exceptional drive-thru and curbside services. The location closest to my office actually converted their entire parking lot into a curbside delivery space. Even now, you simply pull into a space, type the assigned number into their app, and in the blink of an eye, your order is delivered right to your vehicle.
Of course, there are many ways that a business could adapt to changes thrust upon them. As advisors, we must be available to walk alongside our clients during these times. But more importantly, we must show them the necessity of innovation and adaptability. If we can show our clients the value of “weather-proofing” their business models through this type of innovation and adaptability, we can greatly diminish the negative impacts that the next pandemic might have on our business-owning clients.
Recognize Interpersonal Relationships Have Changed
Although the Chick-fil-A example was one of adapting how they served their customers, our clients may also need to adapt to changes in the workforce. When the pandemic first hit the U.S., we saw millions become unemployed. Even now, we have close to 270,000 American workers receiving unemployment benefits. Additionally, many of our clients still have team members who are dealing with sickness — either personally or as caregivers.
This has revealed some of the collateral damage that can come with an event such as a pandemic. Business owners are struggling to properly staff their organizations. This is partially because some have chosen to remain on unemployment. Many workers have found they were able to draw a larger income with the extended benefit provided through the CARES Act. On the other hand, I’ve had clients with employees who have decided that their individual passions have changed and are now pursuing different career paths.
As you’re walking your business-owner clients through potential adaptations and prioritized action plans to better navigate our current situation (as well as future trials), their teams must factor into those plans.
Put the Right People in Place
In some cases, my clients needed to completely overhaul their vision for the business. In these situations, I advised them to be honest with returning team members, clearly communicating the facts and how things will be different moving forward. As with any big change, there are some who will be resistant. It’s important that your client understands that it’s possible that some of their team may decide they don’t want to be a part of that change.
However, this doesn’t have to be a bad thing. Those team members served the purpose which they were hired to serve. Now, things are changing, and they may not be a good fit for the business owner’s new vision. Once they have the right people for their vision moving forward, they can be put in the places that will help them succeed, providing the greatest benefit for their organizations.
Once your client has assembled their team, it’s important that they let them do what needs to be done. Many business owners have a very hands-on approach when it comes to their organizations. Because of this, it’s very easy to fall into the habit of trying to fix everything on their own. However, this is counterproductive to their goals. Instead, your clients must help their team operate according to their new standards. You may need to remind them that a business that requires its owner to be at its epicenter is a business with little value.
Although the Covid pandemic brought about financial assistance via the PPP and EIDL programs, we can’t assume that every disaster is going to yield some form of government assistance. Therefore, it’s crucial for business owners to keep enough cash to carry the business in lean times.
For instance, even though some of the Covid restrictions have been relaxed, there are still areas where the local and state governments haven’t reopened. This makes it harder to keep a positive cash flow because consumers are still in a state of lockdown. Additionally, increasing inflationary rates are adding even more pressure. With higher inventory and overhead expenses meeting a decreased customer load, margins have become razor thin for many business owners. Advising clients to keep more cash can help them weather the storm.
Typically, I would tell a business owner to keep the sum of their average monthly operating expenses in their business checking account, and two months’ of operating expenses in their business savings. However, it may be wise to keep up to six months’ expenses in savings now.
Be Prepared for Anything
If we’ve learned anything from the pandemic, it’s the importance of being prepared for anything. This applies to all business owners, regardless of age or experience. The only difference is that younger business owners may not have had time to build these protections. They may need to lean into the storm. However, your older clients should already have some of these measures in place, protecting their business before the storm ever comes. But, if they’re not as prepared for another event like this, they will need to protect their sandcastle from the crashing waves, as much as possible. Then, after the storm has subsided, rebuild.
As advisors, you must be sure that your clients understand that now’s the time to make smart changes to positively affect their businesses. Listen to them first. Then show them how focusing on providing an excellent experience for their clientele, allowing their teams to follow through with their new plans, and showing financial discipline, can make their businesses even better than they were before the pandemic. Better yet, they could even make them pandemic proof.
Justin Goodbread, CFP, CEPA, CVGA, author and serial entrepreneur, is the founder and CEO of Heritage Investors, Heritage Business Advisors, and Financially Simple. He can be reached at 865-690-1155 or email@example.com.