Businesses around the country are being forced to shut down by local and state governments to promote social distancing and combat the spread of the coronavirus.
And global supply chains are marked by major disruptions as a result. According to a survey conducted by the CNBC Global CFO Council, 40% of companies that have supply chain issues expect it will take up to six months for business to get back to normal post-COVID-19.
SRC Holdings Corp. CEO Jack Stack says a recession is inevitable.
“We have been predicting a recession since ’09 to occur, and this year, we still believe there will be a recession,” Stack said. “It could last through August, but ... we think it will last a lot longer than our original plan.”
The plan Stack has developed for the multifaceted remanufacturing corporation is an eight- to 13-week model, which he said is when he believes the company will begin to see an economic recovery. However, he said other businesses may have a different timeline.
SRC Holdings Corp. employs about 1,800 people across its 10 subsidiaries, according to past Springfield Business Journal reporting, and its most recent reported revenue was $640 million in 2018.
In a livestreamed Q&A with Great Game of Business President Rich Armstrong and Vice President Steve Baker on March 20, Stack explained how the company divided its action plan into four levels: the health of employees; the safety of employees outside of work; how the business will continue to operate; and how the company will compensate employees if it’s forced to shut down. Company spokeswoman Krisi Schell said the company is considered an essential business under city and county ordinances enacted March 26 for residents to stay at home unless participating in essential activities and businesses.
“We don’t have a future without people. We’ve got to get them healthy,” Stack said during the Q&A. “We then have to meet our obligations to our customers at the same time. We walk a really fine balance in making the right decisions.”
In an interview with SBJ, Stack said business owners need to be reviewing their liabilities and determining what can be cut and what can be deferred, such as rent or mortgages. He expects landlords and banks to be lenient in the coming months.
“If you take a proactive position to protect what assets you have, and you’re hopeful there will be aid from our state and federal level, you want to make sure you do the best you can to retain your associates,” he said, adding business owners shouldn’t forget to prepare for the economic upturn. “You have to have a business to come back to.”
Armstrong advised listeners at the Q&A to make sure communication is a top priority to mitigate employee fears or uncertainty.
Stack agreed with Armstrong in a separate interview, adding that team members are essential in the conversation because owners don’t have all of the ideas. It’s also the key to an open-book style management system.
Stack said SRC and its 10 units have been preparing for a recession for over a decade when the executive team first put together a 10-year plan to build a $100 million “war chest” for the next recession. He compared the coronavirus pandemic to a black swan because it’s the one thing for which a company doesn’t prepare.
“You need to make your plans and get people to agree,” Stack said. “Look at your long-term plans and assume there will be a catastrophic hit. This is our fifth black swan [at SRC]. It’s totally different and there’s no way you could predict this, and you know what we did predict? A black swan.”
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.