YOUR BUSINESS AUTHORITY
When the coronavirus pandemic took hold on the local economy, it put business plans to the ultimate test.
Some businesses were forced to close, while others pivoted to stay afloat. And with the virus came new rules that left many business leaders wondering: What do we do now?
Darin Bridges, vice president at The Great Game of Business Inc., says it comes down to making contingency plans a priority in a company’s overall business plan.
“It’s not an obvious step that a lot of people think about,” says Bridges. “Long-term planning does work, but it doesn’t always work out exactly as you want.”
He says management teams should intentionally revisit business plans on a regular schedule and consider factors such as economic indicators, market trends, competition and the company’s strengths and weaknesses to create a growth strategy. From there, business owners should identify and develop contingencies and consider implementing those practices, such as creating an e-commerce platform.
“What I love about this approach is that you’re not allowed to be a victim,” says Bridges. “You’ll be a lot more prepared and a lot less emotional than you would be if you did not have contingencies in place.”
At Great Game of Business, Bridges says the company held all of its client coaching, workshops and speaking events but was able to transition to 100% virtual in less than 30 days. That’s because they already had been working toward putting practices into place after realizing market trends pointed to a virtual setting.
“A lot of times, your contingencies are the things you’re working on that are more or less in your (research and development) department and aren’t quite ready for market. But if you’re in a bad or good situation, you could accelerate them,” says Bridges.
That also was the case for Spring Branch Kombucha. Co-owner Chris Ollis says it only made sense to lean into canning its fermented tea products when draft sales began to dry up in April as craft breweries and coffee shops closed.
He says he and his wife, Jessica, had been planning to add cans to their repertoire since the inception of their business in 2017 – they just hadn’t planned on pulling the trigger so soon.
“We had been moving very slowly and deliberately towards the move into cans,” says Chris Ollis. “We realized that this was going to be the only way we could survive. Luckily, we had a very good plan in place, and the catalyst was the pandemic. If the plan had not been there, this would have been a much more difficult process.”
Sales declined by roughly 50% in April and May, he says, though the addition of canned drink sales minimized those losses, says Ollis. As restaurants reopen, he says draft sales are returning to normal and sales of cans continue to grow, putting the business in a position to potentially end the year with revenue growth.
Now, the Ollises are working on contingency plans for staffing should one or both of them catch COVID-19 or in the event of another catastrophe.
“We’re approaching everything now with ‘what if this happens again?’” he says.
At the Discovery Center of Springfield Inc., Executive Director Rob Blevins led the charge to quickly turn the science center into a child care facility for the families of essential health care workers in March.
The transition happened in five days, though he says the nonprofit is continuously improving the program. Blevins says the transition wouldn’t have been as quick if he hadn’t been creating contingency plans before the pandemic touched ground in the United States.
“Back in January, we started closely watching what was happening in China and immediately became concerned of what would happen if it spread and came to America,” he says. “Proactively, I started working on contingency plans. … We have a unique mission with a giant community attached to it that allows us to be adaptable.”
Now, Blevins says they’re preparing for another pivot: private school.
“We’re looking at possibly starting a private STEM school that focuses on small, spaced out classes in the fall,” says Blevins, adding he anticipates an aspect of child care will remain for the nonprofit’s business model.
It’s that kind of flexibility and contingency planning that several area business consultants say leaders should be adopting in preparation for the next catastrophe.
Francine Pratt of Pratt Consultants LLC says leaders should review their original business plans and look for areas where they can add flexibility, whether it’s the services offered or remote options for employees.
“You always have to have the baseline structure of why you exist and why you went into business, your mission and goals … but you can reevaluate how you’ll use those concepts going forward,” says Pratt, who also is part-time director of Prosper Springfield. “Look at your market and your business and see what adjustments you can make and how you can diversify.”
Mary Overby, owner of business consulting firm Borealis Consulting LLC, says she used to advise clients to keep three to four months of cash on hand. Post-shutdown, she’s suggesting a goal of four to six months of accessible cash.
According to the results of SBJ Publishing Inc.’s second round of the 2020 Economic Growth Survey, most local businesses had either two months or six months in cash reserves when surveyed in April.
Overby agrees that business owners should be focusing on contingency planning.
“What we learned during this crisis is that it became very difficult, if not impossible, for some businesses to operate,” she says. “Some also realized they couldn’t pivot quickly because they didn’t have … plans in place for future growth. They should be identifying those things now and then working to get them established for the next time.”
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