Naumche Ivanovski on LinkedIn and Twitter.

Like every crisis, this one will end at some point, and we all hope this is going to happen soon. There are a lot of predictions, scenarios and I do hope the optimistic ones will prevail.

One of the critical questions is how the businesses should behave during crisis and once we are back to “new normal”? It is worth to mention though, that not all companies will come out of the crisis in worse shape than they were prior to that.

Companies operating in some industries, like pharma, online sales, software-based video communications and so on, due to the nature of their businesses, will experience less business interruption.

Assuming they focused primarily on community support, employee engagement, avoiding extra profit behavior and so on, they can go out from the crisis even stronger than before.

Unfortunately, this is not the case for majority of businesses which are deeply affected by the crisis, whether directly, through direct prohibition of operations for a period of time: hotels, restaurants, airline providers and so on, or indirectly, through general market downsize of activities in majority of the areas.

At the beginning, as the crisis is still at its peak, let’s review how businesses should behave during the critical period:

• Stay optimistic, use every opportunity to be present

During the uncertainty, one thing is certain. Businesses have no chance to survive if they are heavily influenced with all the negativity going on around us that the world has ended and there is nothing we can do about it, leading to victim behavior. This can only serve as self fulfilling prophecy.

By that, I don’t mean that the Government incentives programs are not necessary, or that businesses should manage w/o any support solely by staying optimistic and positive. Absolutely not.

Government incentive programs are important as never before, and every business needs to be proactively engaged in obtaining any kind of support available, however, always remembering that on long run, businesses grow through the process of giving, whether that is providing premium service or delivering world class products! No other way around.

So, with that in mind, companies that will recover the best, are usually the same ones that were proactive and were there for the community, their employees, suppliers and customers during the crisis, as much as possible.

What I mean about that. Humans tend to remember when their favorite restaurant shifted to online sales with discount and they got the food during quarantine at their door or which company switched the clothes production and provided masks to them and the community and so on.

Revised preferences are expected to happen once they go for a dinner or shopping (hopefully very soon).

Through realistic review of possibilities, business owners should asses the overall situation and take small steps in a way to contribute, stay present, be there for the employees, suppliers, customers, and at the end, remember that this too shall pass and the reward will be there for the unselfishness shown.

Especially for the businesses that have unavoidable fixed costs component as substantial part of their cost structure, having any kind of activity, offcource if possible, can turn into better scenario than seize all activities and wait for the crisis to pass.

Now, once we are clear on this, let’s have a closer look to post crisis business recovery actions:

• Bird view reflection and discussion

Where we are? What has changed and how this impacts our future businesses?  Is our “old” strategy applicable in “new normal”?

Can we rely on the created supply chain? How customers are doing? Are we going to cooperate once back?

What changes we need to make so that next similar crisis is not total surprise? Which steps we can take immediately and how to implement proactive long term planning?

The answers are highly dependent and vary significantly based on environment, industry, stage of development of business, historical performance, reputation, goodwill and so on.

All these questions and many more are to be opened and properly addressed, so that information flow is provided for the next deep dive phases of business recovery to take place.

• Realistic Balance sheet review

This is perhaps the most critical part of the recovery strategy. Why is that? Strong balance sheets are a key factor in creating longevity.

Several key areas to be evaluated:

• Business exposure to debt, is it long term or short term, will the business be able to repay it with current cash or reprogram debt?

- Fixed assets component in total assets, at what extend business is dependent on new investments, and in that perspective, what are the financing possibilities?

- Inventory level - do we have increased obsolescence risk?

• Receivables – any risk to collect as due?... and many more

Out of the assessment done, we can analyze and decide on:

• Operational cash flow issues – should be borrow and how much?

- Investments - continue, postpone or cancel?

• Restructuring, cost cutting initiatives - yes, no, when?

Having addressed above difficult questions and created solid reaction plan will pretty much determine how well standing we are at the restart cut-off point.

• Realistic, more frequent profit and loss planning

Once we have scanned the reality, and we know where we are, we are ready for planning our profit and loss statement. Based on business historical data and our bird view assessment, realistic expectation is created and incorporated into profit and loss statement. Still, due to the business interruption, some businesses will need to apply zero based budgeting approach more than rely solely on historical predictions.

Going forward, as unpredictable the starting period is, there will be a need of more frequent review of the assumptions created versus reality. The sooner our assumptions are going closer to reality the better and more predictable our business will become.

Government or any kind of support (if any) should be properly implemented into financials so that all effects (employee costs support for example) are appropriately planned along with the long term liabilities created (retention impact).

• Take care of your employees

There is a wide spread saying „Take care of your employees and they’ll take care of your business”. And, I find it quite important to be reminded for such condition where there is great pressure to downsize the labor force and this is unfortunately happening at large scale.

We need to be realistic and understand that crisis will take its toll on the labor as well, but also to remind that every step businesses are taking to save jobs will have long term positive effects coming from the increased employee engagement.

Now, easier to say than done, with all the pressure going on financials and general cost cutting initiatives taking place. What is worth to mention though, even when decision is taken and restructuring takes place, people should be fairly treated and communicated properly in a way they understand that all other options are evaluated and that this is unfortunately unavoidable scenario under current circumstances and offcource, business is prepared to take the toll on the unpopular measure taken.

• Don’t quit

Not very rare in business and life in general, we come to situation where we are trapped by the strong negativity of the dominant negative event, as the current crisis is.

In those inevitable situations, we tend to narrow the perspective and set the limits by our-selves, as generally, we are the only ones who really have the power to set our limits of trying, no one else can do it for us.

Having that perspective in mind, my last recommendation to business owners would be to try look at the things from different angle.

Instead of thinking about what does not work (obviously a lot, these days), think about what IS working and what IS applicable from it for your business. The flow of optimism will open the doors we were not familiar exist and that will lead to another and another direction.

After all, “Success is the ability to go from failure to failure without losing your enthusiasm” ― Winston Churchill.