Watch Out for Zombie Companies!

 

The term Zombie company was originally used by Japanese media around 1990, to describe companies with large historic debts that ultimately failed and resulted in the country’s 1990 market crash.

The definition of Zombie companies relates to businesses that are highly leveraged, and are generating sufficient cash to fund operations, however, are not able to repay their debt when due.

Their lenders and/or investors continue to support these companies by granting forbearance or by extending repayment terms in hopes that the business outlook will improve.

The real truth is, those companies are in effect insolvent, or dead, and therefore become Zombies.

 

ONE COMMON DENOMINATOR …

Zombie companies come in many forms. They can be startups funded by venture capital firms, family businesses, privately-owned companies, or companies owned by private equity firms.

While Zombies come in all shapes and sizes,
there is always one common denominator,

high debt leverage relative to cash available
to fund operations and debt service.

 

A recent article in Forbes magazine highlighted that corporate debt of large nonfinancial US companies is nearing $10 trillion and small, medium, family, and other businesses not listed in the stock exchanges carry an additional debt of $5.5 trillion.

The total of nearly $15.5 trillion, results in an average debt to equity ratio of 84%. 

A recent CNN article written prior to the COVID-19 crisis revealed that 1 out of every 8 companies in advanced world economies met the definition of a Zombie company.

 

THE COVID-19 CRISIS HAS …

Regardless of the reasons for highly-leveraged companies, the COVID-19 crisis has significantly increased the number of Zombies, although there have been no recent statistics showing how many more companies are almost dead.

The central focus here is that while the number of distressed companies has accelerated since the beginning of the year, what can and should be done to deal with this growing epidemic?

 

 

THE 1ST QUESTION TO ASK …

The first question that has to be asked is can the Zombie be resuscitated?   Can it be brought back to life? 

This question requires that the responsible fiduciaries make an assessment of the company’s viability.

In other words, is the company better off alive or dead? 

It is a common truth (at least with companies we worked with) that life-threatening problems are not always dealt with in a timely manner.

Typically, resolutions to operating problems are pushed off, in the hope that things will get better although they usually do not. This issue always compounds the problems and in today’s environment, the term “Hope is Not a Strategy” is even more relevant.

 

RESPONSIBLE PARTIES MUST ACT …

An honest assessment is required by the responsible parties to make this determination.  And an honest assessment includes a thorough and objective evaluation of the company’s near-term prospects.

When you are a Zombie, it does not help to look at the long term!  Responsible parties should also seek outside help in assessing the near term prospects, to ensure objectivity.

If, at the end of the day, the assessment reveals there are no options to revive the company, the responsible parties must look at all alternatives to maximize the return to its creditors.

Remember, when a company cannot pay its debts when due, the fiduciary responsibility shifts from the shareholders to its creditors.  Companies in this situation must act quickly as the value of the company’s assets declines rapidly.

It is also important to reach out to a firm experienced in helping responsible parties assess their situation and who can suggest alternatives for improving the return to its creditors.

If one believes a company you are affiliated with is headed towards the Zombie World, it is extremely important to evaluate options for improvement before its too late.

 

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Most Business will Suffer and May Fail; Yours Can Survive

 

COVID-19 has already decimated stock markets around the globe. On March 16th, the Dow Jones Industrial Average fell nearly 3,000 points, the highest percentage decline since the infamous “Black Monday” crash of 1987.

While the Dow has recovered by about one-third as of this writing, it and all major U.S. indexes are still down by about one-third in the past 30 days, and the markets will likely yo-yo their way down further before stabilizing.

 

DOUBLE WHAMMY …

Ironically, and serving as a double whammy, the corona crisis is also preventing the industries most suited to benefit from the oil price war from being able to do so.

Instead, falling oil prices serve only to put additional pressure on domestic industries that benefit from (indeed, rely on) higher oil prices.

The cancellation of events and closing of businesses requiring people to gather in even modest numbers (sporting events, theater, bars and the restaurants, the list goes on) would have been enough to have a disastrous impact on businesses small and large-in very short order.

The situation is far more extreme, of course, with many communities across the United States on virtual lockdown as of the date of this article.

 

100% BUSINESS SLOWDOWN …

COVID-19 had already caused systemic interruptions to the supply chain of 75% of American companies, even before the virus had a chance to establish a real stranglehold on the health of our nation.

Businesses must enter crisis management mode as we have reached the peak of 100% business slowdown for any business not essential to treating the virus.

The fact that all this comes at a time when corporate debt ($13.5 trillion worldwide) stands at a record high isn’t exactly a good thing.

 

PERSONAL WEALTH ALSO HIT …

Moreover, given the hit to personal wealth that has already occurred in the form of stock market declines, owners of private businesses will be hard-pressed to borrow from their personal net worth to help prop up their businesses.

In the face of all this: a multi-trillion-dollar federal stimulus package, supplemented by many state, local, and private efforts, has already been announced. 

And while the response to COVID-19 begins to take shape, the question is:

Will this be enough?

While most businesses will suffer, and many will fail, yours can survive. Most will.

And, when your business does survive, it can emerge to take advantage of what by then will be a large pent up demand for goods and services of all kinds-much in the same way that the end of World War II helped to create the postwar economic expansion.

 

There are five general actions you should take immediately to position your business as one that will not only survive this crisis, but which will thrive when it is over:

1. Conserve your cash.
2. Review your insurance policies.
3. Stay informed about government stimulus programs.
4. Review burdensome contracts for provisions that will excuse your performance.
5. Don’t stick your head in the sand.

 

WE HAVE BEEN HERE BEFORE …

Whether it is a blessing or a curse, the U.S. and the world are no strangers to crisis management and coping with global economic meltdowns.

While the current financial crisis has shown signs of dwarfing the Great Recession of 2008, the important thing to keep in mind is that we have been here before and recovered- in large measure with massive government help, which is clearly already on its way.

In fact, from 2009 through 2019, the U.S. economy had rebounded from the Great Recession to reach unprecedented levels. By the turn of the last decade, the stock market was hitting one record high after the other.

The unemployment rate had fallen below 4% for the first time in 50 years as job growth averaged 178,000 jobs per month, and consumer confidence had risen nearly 50%. This is all to say that, at least on a macro level, the effects of the Great Recession have now become a thing of the past.

 

AMERICAN SELF-RELIANCE …

This will also be true of the current coronavirus crash.  American self-reliance and entrepreneurship have never met a challenge it cannot overcome. Ingenuity in the face of new hardships is the cradle of great invention.

On top of that, the rallying of governments, businesses, and individuals alike to respond in a collective manner that promotes the general welfare and greater good provides strength and reassurance that this moment is fleeting, and relief is coming.

As such, this is an opportunity to forge a new way forward as it will be those who adapt to the present circumstances, proceed responsibly, contribute to the local, national and international cause, and protect themselves from future threats who will prosper in the end.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

We’re From the Government ………….

 

The outbreak of the COVID-19 pandemic has made a farce out of that famous saying: “We’re from the government, we’re here to help.”

And lest you believe that this blog is a rant about the President, there are enough of those to go around without our help.

But as a group of individuals that work with companies in either financial or management difficulty, we have learned that most problems can be addressed by two things: Competent Management and realistic Financial Alternatives.

 

THE ROLE OF GOVERNMENT …

The role of the federal government is to manage those things that are difficult to do at the local or state level.  

And this pandemic has certainly demonstrated that the Federal Government has proven to be grossly incompetent at the very things we not only depend on them for, but in doing the things we pay them, through our taxes to do.

Some examples:

Congress decided that the mechanism for distributing money to small business (less than 500 employees) was going to be the Small Business Administration (SBA).

And they set aside billions of dollars for the program.

One of these programs, the Economic Injury Disaster Loan program is supposed to provide small businesses running out of cash due to the pandemic “with working capital loans up to $2 million” according to the SBA website.

 

HOW DOES IT WORK?

How does it work? Let’s hear from one borrower.

“I called the SBA and I actually talked to someone who has been with them for a long time and knew what he was talking about. He explained to me why had all of the hard pulls in my credit. I was one of the original ones who sent everything in with the 2000 (application) number.  As soon as that was received, they pulled.

Then when we had to reapply, they automatically pulled again. I was told on one of many calls in that I should apply yet again which was the 3rd pull on my credit. He was able to look up my application. The one in the 3300 and saw that it was pending in queue and I should hear something by Monday. He also said that there is so many duplicates that they have to go through them to make sure they are duplicates and that is slowing them down.

Also, he told me that they are capping loans at 15,000.00 plus the grant of 10,000.00 for a total. Of $25,000.00, if you meet the requirements of the max 15,000.00 some will be lower. You do get $1000.00 per employee for the grant. He said they had to throw the “up to 2 million” out the window when they received millions of applications. He said they are working 24 hours a day to get these done.”

 

OUR CREDIT RATING …

Since, in our society, credit rating determines many things:

  • Can we buy a house or a car or rent an apartment?
  • And what will the cost of those things be?

Yet, because of sheer incompetence in establishing the program, this person’s credit rating is impacted long after this pandemic is over.  Is that really the best we can do?

Tom Sullivan, the US Chamber of Commerce vice president for small business policy wrote in an internal email:

“I do not understand the SBA’s decision to have a quiet rollout instead of admitting publicly that their disaster loan program is tapped out and Congress needs to grant them more money.”

 

MORE NEEDLESS DELAY  …

But Congress has now delayed returning to work until May4th at the earliest.

This means another multiple week delay for those businesses and employees.

And for those employees that desperately need the unemployment checks from the various state governments, another two weeks to solve the problem of the supplemental unemployment funds.  Much of the country is in long lines for food and Congress extends its vacation.  Why not?  We’re paying for it.

Throughout this pandemic we have heard from the media that states need more protective gear for their front-line personnel and for patients. 

One governor said that “it’s like being on eBay with prices going up with every bid.”  If you’re in a populous state with a large tax base, you probably have the money.  But if you’re in a smaller, rural state, how do you bid against a California or New York?

 

FIXED PRICE FOR ESSENTIAL GOODS …

During the second world war, the Federal Government fixed prices for essential goods.  Anyone could buy what they needed at a fixed price.  How hard would that have been to implement?  In today’s age of incompetent government, maybe impossible. 

Especially when the government maintains an emergency stockpile of this equipment, paid for by taxpayer dollars and a White House staff member announces that this stockpile is “theirs” not the peoples in the states.

There are any number of incompetent actions that we see on the part of both the legislative and executive branches of government. From trying to slide climate change funding into the emergency aid bill or spending $238,000 of taxpayer’s money for a trip to satisfy an ego.

And, as we are reminded, multiple times per day, this is an election year. The suggestion is that we put aside our partisan differences when voting and vote for the most competent management. Not the person with the most money for ad’s, the best sound bites or who believes like you about selected issues, but the people we, collectively we believe are the most competent managers at all levels.

 

COVID-19 DOESN’T CARE …

COVID -19 doesn’t care if you’re a Republican, Democrat or Independent. 

And if you’re one of those people, lying in a hospital bed on a ventilator, you can only hope that the rest of us elected the most competent people we can find.

 

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Managing in the Zone of Insolvency

 

In the difficult circumstances we find ourselves today, many small companies, often backed by venture capital, private equity or significant debt financing, especially those which are not cash flow breakeven, at some point may face the prospect of running out of cash.

This blog focuses on the options available to companies when they are in the process of running out of options to continue the business and need to consider a wind down.

 

Fiduciary Duties And Maximizing Value …

Let’s start with a refresher on the fiduciary duties of directors and officers of a Washington corporation in financial distress.

Under the law in many states, directors and officers owe fiduciary duties of due care and loyalty.  The duty of due care requires directors and officers to make fully informed, good faith decisions in the best interests of the company. 

The duty of loyalty imposes on directors and officers the obligation not to engage in self-dealing and instead to put the interests of the company ahead of their own.

When a company is solvent, the directors and officers owe their fiduciary duties of due care and loyalty to the corporation and its stockholders.

That remains true even if the company is in the so-called “zone of insolvency.”

 

When A Company Is Insolvent …

When a company is insolvent and will not be able to pay its creditors in full, the directors and officers still owe their fiduciary duties of due care and loyalty to the corporation.  

However, upon insolvency, the creditors have the right to bring derivative (but not direct) claims for breach of fiduciary duty against directors and officers.

Remember, it can be challenging to determine whether a company is just in the zone of insolvency (meaning still solvent but approaching insolvency) or whether it has crossed the line into actual insolvency.

Discharging fiduciary duties when a company is insolvent means a focus on maximizing enterprise value. This is a highly fact-dependent exercise with no one-size-fits-all approach. In some cases, maximizing value may mean continuing operations – even though that burns dwindling cash – to allow the company to complete a sale that the directors believe is likely to close and produce significant value for creditors.

In other cases, it may mean winding down (or even shutting down) operations quickly to conserve cash, especially if any asset sale is not expected to generate more than the cash required to pursue it.

These complexities make it critical for directors and officers of a company in financial distress to get professional advice tailored to the specific facts and circumstances at hand.

 

Legal Options For A Wind Down …

When the board decides that the company needs to wind down, options range from an informal approach all the way to a public bankruptcy filing. Note that if the company owes money to a bank or other secured creditor, the lender’s right to foreclose on the company’s assets could become a paramount consideration and affect how the wind down is accomplished. The following is a brief discussion of various wind down options.

Informal wind down: In an informal wind down, the company typically tries to find a buyer for its assets, eventually lays off its employees, and shuts down any unsold business operations, but does not complete a formal end to the corporate existence. This lack of finality can leave legal loose ends, so alternatives should be carefully considered.

Corporate Dissolution: A corporate dissolution is a formal process under Washington or Delaware law, typically managed by a company officer, for winding up the affairs of the corporation, liquidating assets, and ending the company’s legal existence. A company may choose to do a corporate dissolution when it doesn’t need receivership or bankruptcy protection (and prefers not to file bankruptcy) but wants a formal, legal wind down of the corporate entity.

Assignment for the Benefit of Creditors: Receivership: Many states, notably including California, Washington and Delaware, recognize a formal process through which a company can hire a professional fiduciary and make a general assignment of the company’s assets and liabilities to that fiduciary, known as the Assignee. In California, no court filing is involved. The Assignee in turn is charged with liquidating the company’s assets for the benefit of creditors, who are notified of the ABC process and instructed to submit claims to the Assignee. If a buyer has been identified, an Assignee may be able to close an asset sale soon after the ABC is made. In Washington, the assignee converts the assignment to a General receivership and manages the process as a general receiver.

Chapter 7 Bankruptcy: A Chapter 7 bankruptcy is a public filing with the United States Bankruptcy Court. A bankruptcy trustee is appointed to take control of all of the company’s assets, including the company’s attorney-client privilege, and the directors and officers no longer have any decision-making authority over the company or its assets. A Chapter 7 trustee rarely operates the business and instead typically terminates any remaining employees and liquidates all assets of the company. The filing triggers the bankruptcy automatic stay, which prevents secured creditors from foreclosing on the company’s assets and creditors from pursuing or continuing lawsuits. The trustee has authority to bring litigation claims on behalf of the corporation, often to recover preferential transfers but sometimes asserting breach of fiduciary duty claims against directors or officers. Unlike a dissolution or an ABC, the bankruptcy trustee in charge of the liquidation process is not chosen by the company.

Chapter 11 Bankruptcy: A Chapter 11 bankruptcy is also a public filing with the U.S. Bankruptcy Court, and it similarly triggers the bankruptcy automatic stay. Unlike a Chapter 7 bankruptcy, in Chapter 11, often known as a reorganization bankruptcy, the board and management remain in control of the company’s assets (at least initially) as a “debtor in possession” or DIP. Business operations often continue and funding them and the higher cost of the Chapter 11 process requires DIP financing and/or use of a lender’s cash collateral. One primary use of Chapter 11 by a small or mid-sized company is to sell assets “free and clear” of liens, claims and interests through a Bankruptcy Court-approved sale process under Section 363 of the Bankruptcy Code.

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Management Decisions During the Coronavirus Pandemic

 
 

As the uncertainty related to the Coronavirus accelerates, we are beginning to see a certain amount of what appears to be panic among management of businesses affected by the Covid-19.

A newspaper report in Miami, quoting leaked emails from Norwegian Cruise Line stated in the wake of the epidemic, a Norwegian Cruise Line (NCL) employee in South Florida says some managers have asked sales staff to lie to customers about COVID-19 to protect the company’s bookings.

 

PUT ON A PROGRAM …

The emails not only suggested specific lies to tell prospective passengers, but also made it clear that if the salespeople did not meet their sales quotas, the would be “put on a program” and fired.

A United flight from Colorado to New Jersey, made an unscheduled stop shortly after takeoff because a passenger sneezed. Apparently, a number of passengers panicked over the sneeze and three people left the aircraft. The passenger who sneezed, after having their temperature taken, was allowed to continue on the flight.

And speaking of United Airlines, based on a new schedule change policy the airline won’t let you refund your ticket unless the airline changes your flight schedule against your will by at least 25 hours. The previous policy was two hours. United has now said they will evaluate this on a case by case basis.

It’s outrageous to think that the airline could cancel your flight in advance, re-book you on a flight 24 hours later, and you still wouldn’t be entitled to a refund.

While it’s true that cruise ship bookings are being cancelled at a record rate and airline travel is down by as much as 20%.  Airlines are cutting flights to compensate, only United, so far has imposed a draconian refund policy.

 

REACTING TO FEAR …

The reaction that we are seeing from these incidents is a reaction to fear.

Fear of lost revenue and profits; fear of exposure to a serious illness and just a generalized fear of not really knowing what’s really going on.

But when we face fear, whether personally or of the more existential variety, the natural inclination for any of us is to be paralyzed or to react out of our fear. But reacting from fear or taking no action is often an ill-advised reaction.

If knowledge is power, then people need to be empowered by information. As the CEO of the executive search firm, Korn/Ferry states:

“I’ve always compared the leader’s role to that of a shepherd: occasionally in front, sometimes along side, and often behind. These days, however, the leader must be in front.”

 

SHARING INFORMATION IS …

Sharing information is critical, but far less than half the battle.

Of course, people need to know about strategy, speed, direction, and results.

But it can’t stop there. Language is an art to express ideas-but the messenger is the message.

“Actions speak louder than words” is true for everyone-and twice as true for leaders. It’s not just what you say, but how you say it.

Verbally and nonverbally, the way in which communication occurs-humbly, passionately, confidently-has more impact than merely the words chosen.

 

 

LEADERSHIP LIVES HERE …

Communication is where leadership lives and breathes.  It informs, persuades, guides, assures, and inspires. Here’s how:

  • Listen for the truth.
  • If leaders want to hear the truth, they must welcome it. That won’t happen, though, unless people feel it’s safe to say what they really think without fear of retribution and not just what they think leadership wants to hear.
  • The information highway. Communication is far more than a transmission of information. Communication needs to be the “information highway,” flowing freely in both directions and in every circumstance. Important in good times and crucial in challenging ones.
  • More assurance, less authority. Communication is connecting and engaging with others. Messages must be delivered frequently and consistently, with candor and honesty. That means speaking with more assurance than authority and being concerned with tone as well as content. Passionate, confident words motivate. Although information is crucial, if the message lacks authenticity, the team’s follow-through may be lackluster or even lacking.
  • People would rather know the truth.  In bull markets, people look to the leader for validation.  In bear markets, they look to the leader for assurance. When faced with a challenge, people would rather know the truth than dwell in the worst-case scenarios residing in their imaginations.  Leaders who don’t communicate will become the subject of others’ communication and not in a flattering way.
  • Beware the vacuum.  If not addressed, a lack of information can lead to hazardous uncertainty. People will spend their time speculating, because there’s an information vacuum that needs to be filled. Uncertainty breeds conjecture, escalating fear and causing chaos. No matter how serious the news, people prefer certainty. To predict tomorrow, people have to accurately perceive the reality of today. Then you can plot a course for tomorrow.
  • No shortcuts allowed. Communication takes time-and lots of it. The temptation, therefore, is to take shortcuts such as assuming that people already know certain information or else glossing over a message from an employee or passing it along to someone else. Take time to acknowledge messages-and the messengers. Show others that they matter.

Remember, for a leader in uncertain times and, in particular, these times, it’s not simply about staying on message. The leader is the message.

 

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.

Lead Your Business Through the Coronavirus Crisis

 

coronavirusThe Coronavirus (Cov-19) has now reached a new, critical phase where public health systems need to act decisively to contain the growth of the disease outside China.   Clearly, the main emphasis is and should be on containing and mitigating the disease itself.

But the economic impacts are also significant, and many companies are feeling their way toward understanding, reacting to and learning lessons from rapidly unfolding events.

Unanticipated twists and turns will be revealed with each news cycle and we will only have a complete picture in retrospect.  Given the very different degrees of preparedness across companies, the potential for further disruption, and the value of being better prepared for future crises, the Harvard Business Review has developed a few lessons for helping companies respond to unfolding events.

 

DO THESE THINGS …

Update Intelligence On a Daily Basis.
Events are unfolding with astounding speed and the picture changes on a daily basis. Only several days ago, it looked like the outbreak was mostly confined to China and was being brought under control.

More recently, a number of fast-growing epicenters of infection have sprung up beyond China, signaling a new phase and potentially necessitating new strategies of mitigation rather than containment.

You need to move to a daily cycle of information within your company.

Beware of Hype Cycles / News Cycles.
News organizations often focus on what’s new rather than the big picture, and they sometimes don’t distinguish between hard facts, soft facts, and speculation. Yesterday’s news is likely to frame how your organization thinks about the crisis today.

When exposed to fast changing information, be it a new technology or an emerging crisis, we have a systematic tendency initially to overlook weak signals, then to overreact to emerging issues before we eventually take a more calibrated view. As you absorb the latest news, think critically about the source of the information before acting on it.

Don’t Assume That Information Creates Informedness.
informedIn our connected world, employees have direct access to many sources of information.

Leaders might reasonably conclude that there is so much information and commentary available externally that they don’t need to do anything additional.

We have found, however, that creating and widely sharing a regularly updated summary of facts and implications is invaluable, so that time is not wasted debating what the facts are – or worse, making different assumptions about facts.

Constantly Re-frame Your Understanding of What’s Happening.
A big-picture synthesis of the situation and a plan to deal with it, once captured on paper, can itself become a source of inertia.

A Chinese proverb reminds us that great generals should issue commands in the morning and change them in the evening. But large organizations are rarely so flexible.

Managers often resist disseminating plans until they are completely sure, and then they are reluctant to change them for fear of looking indecisive or misinformed, or of creating confusion in the organization.

A living document, with a time-stamped “best current view” is essential to learn and adapt in a rapidly changing situation.

 

7 KEY AREAS TO ADDRESS …

Make sure your response is balanced across these seven dimensions:

1. Communications: Employees will likely be exposed to conflicting information and feel anxious or confused about the best course of action.

Be sure to communicate policies promptly, clearly, and in a balanced manner. Furthermore, communicate contextual information and the reasoning behind policies so that employees can deepen their own understanding and also take initiative in unanticipated situations, such as employee holidays in a restricted location or how to handle contractors.

2. Employee Needs: Restrictions on travel and congregation will trigger employee needs for access to education, health care, daily provisions and the like.

You should anticipate and develop solutions to these and create an information hub where employees can find all the information they need.

Many of these needs will be locally specific, requiring a multi-tiered approach to policy making.

3. Travel: Make sure that travel policies are clear in terms of where employees can travel to, for what reasons, what authorizations are required and when the policy will be reviewed.

4.  Remote Work:

Be clear on your policies – where they apply, how they will work, and when they will be reviewed.

Home working is rare in some geographies, like China for example, and the need for additional explanation should be anticipated.

5. Supply-chain Stabilization: Attempt to stabilize supply chains by using safety stocks, alternative sources, and working with suppliers to solve bottlenecks.

Where rapid solutions are not possible, co-develop plans, put in place interim solutions, and communicate plans to all relevant stakeholders.

6. Business Tracking and Forecasting: It’s likely that the crisis will create unpredictable fluctuations.

Put in place rapid-reporting cycles so that you can understand how your business is being affected, where mitigation is required, and how quickly operations are recovering.

A crisis doesn’t imply immunity from performance management, and sooner or later markets will judge which companies managed the challenge most effectively.

 

7. Being Part of the Broader Solution: As a corporate citizen you should support others in your supply chain, industry, community, and local government.

Consider how your business can contribute, be it in health care, communications, food, or some other domain.

Focus on the intersection between acute social needs and your specific capabilities – in other words, live your purpose.

 

This crisis will, over time, pass. Or, we’ll learn how to live with it and adapt.

But we should recognize that this crisis, like others, will change our businesses and society in important ways.

It will fuel areas like online shopping , online education and change how companies reconfigure supply chains and move away from dependence on a few large factories in supply chains.

As this comes to an end, leadership will require understanding lessons learned and how they effect your business.

 

Revitalization Partners specializes in improving the operational and financial results of companies and providing hands-on expertise in virtually every circumstance, with a focus on small and mid-market organizations. Whether your requirement is Interim Management, a Business Assessment, Revitalization and Reengineering or Receivership/Bankruptcy Support, we focus on giving you the best resolution in the fastest time with the highest possible return.