We are in unprecedented times.
Economically. Medically. Emotionally. There are so many factors attributing to the current crisis in the world, it’s hard to know which way to turn. And sometimes, it’s hard to get motivated to do anything at all.
This article isn’t about what’s going on in the world. It’s also not a set of “hot tips” on how to make it through. No speculation about how long a downturn will last. Setting the table for your company to thrive during this pandemic (and the after the ensuing economic damage) involves fundamentals.
What is covered here is a way to set up your next few months and years in a way that means more than just survival. And we should have been doing these things all along.
Panic Leads to Doom
Imagine a young adult person with a relatively good life. Active lifestyle, decent career, doesn’t eat too bad and is free of most bad habits. Then, the person loses their job and can’t find another one. Instead of hunkering down and working to find employment, they panic.
The stress causes them to eat poorly, affecting their health. Plus, not liking what they see in the mirror, they begin other poor habits, let’s say smoking, since we all (likely) agree it’s bad. One pivotal moment (job loss) wrecks an otherwise productive person.
Coronavirus will inevitably have the same effect on businesses across the world.
Owners and founders will panic. One bad decision after another will seriously diminish the company’s ability to function, making the losses even worse. Over the past decade, we’ve seen unprecedented growth in America. Times were seemingly good.
During this time, fundamentals got sloppy. Goals became cloudy, line items on the P&L crept up and no one noticed because it (seemingly) didn’t matter.
Now it does and it should have all along.
So, What Can You Do?
At Tracers, we use a specific framework for setting and working toward goals. While we won’t go into it all, the rest of our time is devoted to the basics. Here they are:
- Pick a goal: Doesn’t have to only be “survive” (but it may be) could be “thrive”. Primary goal is to protect people.
- Come up with a plan: The plan to achieve your goal is how you don’t panic. Each time anxiety creeps up — you have a plan. Not just a plan, but one that is geared to achieve your goal.
- Work Your Plan and Iterate: Choose the best tasks to complete your plan, checking progress at regular intervals.
Now, let’s cover these in a bit more detail.
Step One: Pick a Goal
Believe it or not, your goal doesn’t have to simply be “survival”. Thriving is possible, especially when it comes to law firms. That said, survival is an important part of your plan. A business cannot thrive without the ability to survive in the hardest of times.
At Tracers, our goal is to protect our people.
The decisions made, plans developed and processes carried out are intended to achieve this goal. Your goal will be different. Some examples include:
- Achieve a certain level of cash flow
- Maintain/achieve a consistent number of billable hours
- Pivot the business to better adapt to a potential recession
Once you have the right goal, the thing that will focus your entire organization, you’re ready to get started on the plan.
Step Two: Come Up With a Plan
We hope to either thrive during this downturn, or set our businesses up to thrive after it’s over. But as mentioned, survival is first. In this section, we’ll cover a bit of both phases; a “survive” phase as well as a “thrive” phase.
Phase One of the plan — Survive (Immediate)
Remember that person, the one who fell apart when they had economic challenges? If you have been caught off guard by this out-of-nowhere experience, this section is especially important to understand.
Any plan you come up with must begin with a firm understanding of where you currently stand. This means getting a very firm grasp on details of your business. Take control where you have (or should have) control.
- Know your numbers: Unprecedented times and busy schedules may have prevented this during the booming economy, but now is the time to know all financials. Go through every line item, debt and asset to understand how much you make and spend each month.
- Calculate the Effect: No one knows how bad this will get, but you’ve possibly seen some trouble already. The question is, if you keep the current course, how bad is it likely to get?
- Calculate Burn Rate/Expenses: Now, take the “how bad” along with your current understanding of the cash flow to figure out how fast you burn through the money during the downturn. For instance, if you’re spending $40,000/mo and are now only making $35,000 — you know cuts must be made to survive, in the immediate sense.
- Make decisions: You have where you want to go and a better look at how far you are from it. Now, find an unemotional way to make it out to the other side. This may sound cold, but cuts are likely needed in order to reach a better position during the recovery.
Phase Two of the plan — Thrive (Medium – Long term)
In this phase, we’ll specifically speak to legal professionals, namely law firms. The legal industry is (by-and-large) countercyclical. If times are good, business law and other specialties are a great focus. But in down times, custody cases, bankruptcies and crime are almost certainly on the rise.
So, what should a law firm do to keep on the right side of the cycle? Pivot.
Important Note: If you’re not a law firm, pivoting your business is just as crucial. Think about what your customers need your products for, not just a “nice-to-have”. If you do this, you’ll be on the right path.
There’s no series of steps here, because pivoting will be largely based on your firm. This is a subjective move, as opposed to the business fundamentals in the “survival” phase. It’s important to understand what a pivot entails (marketing, training, administration) and that the pivot ultimately helps you attain your goal.
A Note on Getting Feedback
The proverbial pencil is down, and you have a tentative plan to reach the goal. But there’s a problem. If you came up with everything by yourself, or with a small team, there is a large opportunity for error.
Find (or create) a network to “poke holes” in your plan. Other firms, business acquaintances you trust or other sound counsel to help review and push back on issues.
Step Three: Work Your Plan (and Iterate)
With a plan (thoroughly vetted) in hand, it’s time to actually do the work. By work, we mean set up processes and individual tasks meant to fulfill elements of your plan — working toward the goal.
Making cutbacks, furloughs and layoffs
Applying for government assistance
Creating advertising, sales channels
Contacting current clients to offer pivoted services
Anything that needs to be put on a tasklist and completed, it’s time for that. One process we’ve found helpful is a process from the Entrepreneur’s Operating System. It’s called setting “rocks”.
Rocks are a handful of priorities to focus on (as a team) over a period of time, like 90 days. So, things like:
- Onboard the first bankruptcy client within 30 days. Sub tasks may include emailing current business clients to offer reorganization services
- Increase cash-on-hand to six months of operating expenses
- Transition to a remote-work firm (in order to save expenses and better thrive post-pandemic)
Again, each of these “rocks” are position points of your plan, which all work toward your goal. It’s now time to begin the process. Focus on the fundamentals, find a path for survival, pivot to thrive and then work the plan.