Today Glenn Gow covers four critical steps CEOs need to take in a downturn.
Face Reality and Be Ok With It
Imagine you’re running or biking and you’re going along just fine on the flats. Then you encounter a hill. The hill is there, it’s not going away. This downturn is like the downturn created in the amount of effort you’re now going to need to put in to climb that hill. Things are going to be harder. Now you’ve encountered many obstacles before, and this is just another obstacle to overcome.
Here’s a great phrase for you. It is what it is. I want you to be okay with what it is because you can’t change the outside environment. Facing reality and being okay with it tees you up for the next step – adjust your plan now.
Adjust Your Plan
Now, remember we’re encountering a hill. I’m going to go a little bit deep into this section. There are four parts to it:
Reduce Your Burn
It doesn’t really matter how much you’re spending per month. Whether you feel like you’re spending too much or not enough, you want to look for opportunities to reduce your burn. In some cases, this is trimming here and there. In some cases, this can be a radical change where you use strategic or selective reduction in force, or you can stop certain projects that are going on. Look for ways to reduce your burn even if you’re not feeling pain in the marketplace yet.
Stay on Top of Your Cash
Now stay on top of your cash. Understand exactly what’s happening with your cash flow. Understand exactly how much cash you have and ask yourself, how can I get more cash now? Can you get a loan? Can you get a line of credit? Can you take that cash and provide equity or warrant? Stay on top of your cash and understand exactly what’s happening in that world, because the number one reason companies fail is they run out of cash.
Narrow Your Focus
Now narrow your focus. Most companies are looking at opportunities to expand and grow. In this case, when you adjust your plan, I want you to narrow your focus. That doesn’t mean you can’t grow. What it means is you’re going to put more wood behind the arrow. You’re going to be very specific about what is the opportunity in front of you, and where you’re going to invest. I want you to narrow your focus based on what’s happening in the outside world. And so that could be to enable you to focus on creating more revenue or more cash or more profitability, but ask yourself, how do we narrow down?
Go Deeper with Existing Customers
Go deeper with your customers. Often the secret of success is going to reside inside your customers. How they think about you in a downturn, how they think about helping you if you have a really close partnership. You can learn about what’s most important to them, especially as a downturn progresses, and how you can serve them better.
Number three, communicate, communicate and communicate. When people are worried and trust me, people in your company are worried, or they’re concerned, or they may be scared. You need to communicate with them. When people don’t hear from the top leader, they worry even more. When you communicate, first of all, you want to communicate frequently when you communicate, don’t promise things you can’t promise. You might want to promise that, we’re not going to have layoffs, or you might want to promise that, oh, we’re going to be fine. Be careful about what you promise. A promise is different from an aspiration. So don’t promise things you can’t be positive about because you don’t know how this is going to play out and you want people to trust your word.
People are going to be concerned. How do you come back to the basics of motivating individuals? Ask yourself that, so that when you’re interacting with them they feel like they want to put in the extra effort to make things happen on your behalf, on the company’s behalf. You want them to be motivated even more so than when things were going better.
Share Your Confidence
Share your confidence, not your fears. It’s okay as a CEO to have fears, it’s appropriate to have fears and deal with them. What you want to share is your confidence. You can say, “we are going to get out of this, and here’s our plan to get out of this. We are going to deal with a downturn. Here’s our plan to deal with a downturn.” Share the confidence without promising about what you can do as a company. What you can do as a CEO, what you can do as a team.
Get to Work
Don’t ruminate on bad things that are happening. Don’t stare at the performance of the stock market. Don’t get your hopes up just because there’s an uptick or get your hopes down because all of a sudden things are not looking good. You have a plan you’ve tweaked your plan. Now take that plan and execute that plan with the energy that brought you to this job in the first place. You now know what to do now is the time to execute.
Contact CEO Coach Glenn Gow Today!
My name is Glenn Gow, CEO Coach. I love coaching CEOs and want to help make you an even better CEO. Let’s decide if we are a fit for each other. Schedule a time to talk with me at calendly.com/glenngow. I look forward to speaking with you soon.