Cash is the lifeblood of any company.
But in a pandemic, it can be difficult to know how to perceive the cash situation of your business. Should you be more conservative? Should you carry on “business as usual?” When is it safe to start hiring again? Of all the places to invest the company’s profits, what are the priorities?
During any sort of economic issue or major crisis, the first step a business should take is to audit themselves and how they are positioned in the current environment. But immediately following that period of self-reflection should not be a long and drawn-out period of inaction. The best companies, no matter how difficult the situation, continue moving forward, and continue to invest in themselves and their growth.
A timeless example here would be the 2008 mortgage crisis. Where everyone else saw wreckage, Warren Buffet saw an opportunity. He proceeded to invest billions of dollars into companies he believed would weather the storm—and helped them do so.
He emerged from one of the worst financial crises we’ve ever experienced as a country $10 billion dollars richer.
The same logic holds true no matter what size company you are.
In a financial crisis, or a pandemic, or when tensions are high politically, there is no “going back” as a company. The only direction is forward, and in order to move forward effectively, you are going to need to look for opportunities to improve what you’re doing, how you’re doing it, and what new opportunities have presented themselves that might not have been previously available.
Here are four reasons why right now is not a time to play conservatively but to reinvest in your growth as a business.
1. Downturns can be catalysts for deep, strategic thinking
Whenever there is an economic slowdown, companies and their leaders are inherently forced to think hard about the future.
For example, our company works directly with CIOs and CFOs to provide them with enterprise content management and security, and a year ago, many of our conversations were centered around productivity and efficiency. The world was the way that it was, and company CIOs or CFOs wanted to optimize the current configuration of their workforce.
Since then, the conversations have changed dramatically. Sure, there are still productivity and efficiency improvements to be made, but now companies are asking themselves different questions: “How do we manage a distributed workforce? How can we reduce friction between departments suddenly working remotely?” The business landscape has shifted, which means the way they judge and perceive their business has shifted.
As a result, now is not the time to “tweak” what used to work.
Now is the time to think hard about how your company can and should work five to 10 years down the line.
2. When a business is forced to change, employees will tell you where you need to improve the most
When it’s “business as usual,” no one feels the need to speak up about things that aren’t working all that well.
However, when a crisis hits, everyone is impacted—from company leaders, all the way down to entry-level employees. This pandemic has been especially unusual, in the sense that it has not only impacted businesses and people financially but personally as well. It has caused lifestyle changes, workplace adjustments, and even impacted employment expectations. As a result, company leaders everywhere are surely hearing from their employees what’s working and what isn’t.
This is a good thing, not a bad thing.
Part of improving an organization is finding ways to break through the different silos of an organization. One approach is top-down, where the company leaders make decisions unilaterally. But another approach, which is happening right now, is bottom-up—where employees are vocalizing to company leaders what they need in order to be successful.
Listen, and you’ll hear exactly where you as a company need to innovate next.
3. Now is a great time to leverage different financial instruments to grow your business
When there is an economic crisis, the Fed lowers interest rates.
The reason is that lower interest rates mean better lending opportunities for businesses—which, in turn, hopefully, spurs economic growth.
This means right now is the best time to be leveraging debt to finance your growth as a business. Now, should you take on debt when things clearly aren’t trending in a positive direction? Probably not. But if you are a business that has been cash-constrained but growing for quite some time, then these are the moments in history that can define your 10-year path as a business.
It’s not every day you have the ability to take out a loan with 0% interest.
4. If you ever needed a reason to do things differently, now is it
Put yourself in the shoes of your target customer.
Right now, considering all that’s happening in the world, what do they need in order to be successful? How can you better help facilitate their wants and needs—not necessarily by doing what you’ve always done, but by considering a new and different way of providing your product or service?
For example, if you’re a healthcare provider, what tools, platforms, or technologies can you invest in to facilitate faster, more efficient remote communication? If you’re a consultancy, how can you provide a more cost-effective package for businesses that still need your help right now but are capital constrained? Where are the opportunities to bring new products and services to markets that didn’t necessarily exist a year ago—but suddenly, there is an opportunity and you are perfectly positioned to deliver?
Markets, and the business world at large, is always cyclical.
There are good times and bad—things go up, and things go down, but the best keep moving forward to enhance their competitive advantage.
What matters is how you choose to handle the situation, and where you choose to move next as a growing business. Don’t pull back.
Robert Estes is the president and CEO of Reveille Software.