5 Changes for Business Leaders to Consider Going Forward These guidelines may help your business navigate the new abnormal.
Opinions expressed by Entrepreneur contributors are their own.
As business leaders, we have entered into an entirely new reality: The ongoing pandemic has forced many to reevaluate how we currently operate traditionally entrenched industries and working models. Many companies are still reacting to this "new abnormal" and have not taken the time to evaluate the strategic impact and address if or how they may need to pivot their current company trajectory. More than ever, business leaders have a clear and present obligation to reevaluate their organization from stem to stern with a critical eye towards longevity and financial success.
One of the opportunities presented in moments such as this is how we can focus on and catalyze strategies that may have been brewing in the background for years. Times of immense change can also be a tremendous motivator to galvanize your business stakeholders to action around bold new initiatives. Before considering any such drastic changes, however, you need to consider five key questions that will serve to guide you and your company through this time of change.
While many businesses are scrambling to increase their sales, they may be overlooking strategies for obtaining a healthier net profit. It's important to understand that increased sales don't always lead to increased profits, however, decreasing expenses will always lead to a healthier bottom line. One of the best strategies for assessing your current business expense opportunities is through the incorporation of a "zero-based budget" assessment. Zero-based budgeting requires you to remove all business expenses and then add them back with a more critical eye on justification. This process can help business leaders determine spending outlays that must continue for baseline operation of the business, and expenses that can be offset until there is additional revenue or reconsidered altogether.
Related: How Your Small Business Can Survive The COVID-19 Pandemic
Changing pay structures
As wages are often the single biggest expense most companies have on their profit and loss, the topic of wages cannot be avoided. While broaching the subject of alternate pay structures can undoubtedly be a sensitive topic with employees, it is one that should be considered seriously and discussed directly. Faced with an opportunity to contribute to further longevity of the enterprise or risk dissolution of that company, many committed employees would likely take the opportunity to consider alternate options. If handled appropriately and consistently with clear communication and expectations, this can strengthen team cohesion and bring more commitment to working through the challenges faced by the company.
As with any such sensitive topic, it is also an opportunity to show the strength and the character of a company and its leadership by ensuring that impacts are burdened by all members of the organization, not just by a select few. It is also critical that any deferral commitments are upheld and the timing of any resumption or decisions to extend should be communicated early and often.
Related: A 10-Point Small-Business Survival Plan for Dealing With the Coronavirus
Reducing real estate assets
Decreasing leasing burden for real estate and associated costs for workforce facility support may be another, significant expense to consider. After many workforce segments were migrated to working from home scenarios, the established thinking about physical location dependencies (shared workspace, business travel, etc.) has been fundamentally put into question. A survey conducted in May 2020 for CNBC and Survey Monkey employees indicated increased levels of happiness as a consequence of working remotely. In fact, for many small businesses, production capacity has gone up for a number of related factors, including commute time reduction.
As an example of rethinking direction as it relates to the in-person workforce, REI recently announced its intention to sell the site of a proposed Seattle campus as part of a strategy to provide more flexibility for remote work opportunities for employees. If appropriate for your organization's working model, surveying your current staff to determine if permanent remote working is feasible may open up some new options to financially benefit the organization broadly.
Automating processes to reduce time and cost
Before undertaking any initiative to automate processes, do be sure that the current key performance indicators (KPIs) of those processes and means of consistent measurement are understood – any potential change should be measurable to ensure the overall benefit and not degrade a potential value driver. Even simple time management logging for significant business processes may be helpful to determine areas of opportunity.
As an example, many business leaders still currently use manual management of employee records and compliance. For employers with a workforce that must be onsite or supporting services with needed human interaction during the current pandemic, many regional authorities have introduced new mandated policies and procedures that can be onerous to support in a manual manner. A simple means to reduce paperwork and ensure everyone is following your safety policies is to have each employee complete ongoing training and compliance tracking through online applications, allowing for real-time updates and on-demand progress reporting. This can be a tremendous boon to bottom lines where the need to have up-to-the-minute workforce status can be a make-or-break moment for an enterprise, and result in significant additional person-hours to recover.
Related: 198 Free Tools to Help You Through the Coronavirus Pandemic
Additional grants and resources
While the Small Business Administration (SBA) federal disaster funding initiatives including the Payment Protection Program (PP) and the Economic Disaster Relieve Loans (EIDL) program have helped small businesses offset the loss of sales, all businesses should be aware that many other avenues of financial support exist, and might be uniquely appropriate for your organization.
Many state and local municipalities have set aside grants in an attempt to buoy up the local economies. For example, Prosper Portland is a regional organization funded by grants and local tax increment debt, with the specific goal of fostering economic prosperity locally. The organization had recently assigned more than $15 million in grants for small businesses, of which more than 200 businesses received grants upwards of $10,000 in the initial funding round.
Do check with your state and local economic development agencies to determine if additional funding or other in-kind resources are available for your company.