The economy was the best I had seen it in my 55 years. Everyone had a job, interest rates were low, confidence way up and nothing seemed to phase us for long. What could go wrong?
The Black Swan.
It has been hard to lead during this crisis. The reason is that leaders do not have much control over it, and we don’t know what will happen tomorrow relative to the virus or any announcements that come out from the government. The media has fed the hysteria and scared people.
I had 670 employees at the start of the crisis. Here is what I know.
I am responsible to see that this business comes out the other side intact. We need to preserve our ability to operate. I must NOT run out of cash. If I cannot pay my employees, we are done. Finished.
I am monitoring leads coming in and sales very closely. I am monitoring my Spread every seven days (Cash + Receivables – Payables = “Spread”). I am calculating my breakeven (Fixed costs / Gross Profit Margin = Breakeven) each time we make a change to our fixed costs.
To set things right, you have to see things right.
If my sales are less than my Breakeven and my Spread is shrinking, I must take action to make my company smaller and reduce fixed costs. Obviously I prioritize keep the best people so we may fight again tomorrow.
I could ask for volunteers to be laid off (there are some). I could lay people off. I could reduce their working hours to four days a week or even three. I could even cut pay and bonuses. I could do combinations of all of these.
I have been financially conservative all these years. We have no debt of any kind. I have positioned my company to weather this crisis. We have a great reputation and great employees with a caring culture and environment of high trust.
At the same time I am playing this strong and firm defense, I am working to play a strong offense. This can be a bit unpredictable. Consumers are not acting the way they usually do. Some are using fear, and not their usual criteria. But some are home and taking advantage of the time off to call us to get things done around the house. We work closely with our salespeople each day and focus on each sale.
I keep the spirits of my people up. (Many are working from home). I do not get hysterical myself. If people freak out, I go calm and think. I do my best. I eat right and get enough sleep, and still work out every other day.
I have a job to do and I will not mess this up. We will survive and thrive.
The Black Swan will disappear, and we will still be here.
I am the leader.