NJTC sat down with member company, Edison Partners, to discuss COVID-19, its implications on business, and how companies can prepare themselves.
Question: What are the financial implications of this situation? What steps should we take to evaluate our financial direction and growth strategy?
This is a prime leadership situation whether the health concern ends surprisingly quickly in May or ends much later.
The biggest CEO decision frame after employee safety and BOD communication is the growth to burn ratio and what adjustments you need to make if that ratio is going down now. If you are less than six months of cash runway available (rolling basis) and your growth rate drops starting in March combined with 50% to 80% GM then it is a simple calculation of where your call to action is for immediate focus. You should have a process starting Monday with the head of finance on more scrutiny of detailed growth to burn items.
Question: How frequently should businesses be evaluating their expenses and spending?
Ensuring you are air–tight on your top ten expenses internally and top vendors costs is the same as having breakfast for at least the next three months. Sales commission is one of the only favorable items on a variable basis in a fast marketplace contraction. All expenses in marketing centered on demand generation, discretionary and usage spending should be re-assessed on a weekly or even daily basis if you are B2C.
Question: How can financial departments best communicate cash flow internally, especially when many meetings are now virtual?
We recommend a cash flow dashboard for your weekly staff meeting (that might be a dial-in so crisp pictures are necessary). The dashboard pattern after three weeks is the value versus the weekly number itself. If you do not have one or want me to take a look at yours feel free to send it or request it. We will build one for you after one call with your CFO/VP of Finance. Please note we are happy to build one for any NJ company during these times. You can contact [email protected].
Question: How can leadership pivot during a transformative time like this?
Knowledge builds confidence even when those around you lack it. You made assumptions on how and where you are growing. Go deeper now. Our opinion based on experience is your team will know more than you – how to be disciplined and also how to be clever and even opportunistic.
Question: Most businesses are working on their plans and changes to adjust their go-to-market strategies and communications. Who do you recommend businesses reach out to during such a busy and uncertain time?
Your Board should be a resource and probably can share experiences from previous cycles. Use them often and wisely!
Question: How flexible is cash flow at a time like this?
You can always go back to burning cash very quickly. One of the easiest and most popular things to do as a CEO
Question: How will COVID-19 impact vendor and customer relationships?
There is going to be a two-way street on vendors and customers. Your customers may take advantage of the situation and you will need to assess your latitude with your vendors at the same time.
Question: Should businesses be concerned about their loans?
We are sure lenders are telling their teams to review their loan portfolio and discussing trip wires connected to covenants.
Question: With popular sales engines like trade shows and conferences being cancelled, businesses are re-structuring their revenue models quickly to continue closing deals as the first quarter ends and sales reps prepare for the second quarter. Which model do you recommend?
Inside sales models are superior to field models at the moment. And obviously online revenue models. If you have a choice of go–to–market then you should run a few scenarios on the P&L where inside sales becomes more weighted on quota and commission for the rest of the year. If you are only a field model than you cannot do this but can assess hiring.
Question: Many organizations over the years have conducted customer on-boarding virtually. For businesses that are still on-boarding in person, what do you suggest?
If you are able to adjust your product(s) for more remote on-boarding even if it is not the full product value then this is a good thing to do – and coupled with an inside sales over-weight for now.
Question: The conversation and process around renewing customer contracts is more delicate right now – what action do you recommend?
In our experience, extending customer contract renewals (month to month) without entering into a renegotiation is sometimes wiser.
Question: How can we encourage an increase in the quality and quantity of communications with prospects and customers?
Mobile working productivity is a must. Do you have the tools and culture? Are you uncovering some tricks and hacks to get voice of the customer feedback on your top 50% of the revenue base with an inside operation between sales, customer service and product management? In this age of constant connectivity and communication this is always a good thing to do anyway.
Question: How can we be the best possible leaders when overcoming challenges presented by COVID-19? Are there steps to take to transform businesses to be more agile overall?
Everyone always states that getting real and decisive is the critical leadership requirement in tumultuous times. But we have found the smartest and most enduring CEOs are the ones who ANTICIPATE the future by running scenarios, making assumptions and have a process to support their judgments and decisions across the whole business.
“We have not said anything new or profound. It’s a note of respect, feeling and support as you steward your company. Feel free to reach out anytime.” – Kelly Ford & Christopher Clark, Edison Partners – Princeton, NJ
As a top PPP lender, Cross River provided more than $6.5 billion in relief to nearly 200,000 small businesses, saving nearly one million jobs to