As a CFO, one of your key responsibilities is leading your company during a crisis. Whether the turbulence is exclusive to your business, industry, or geography or impacts the world, you must navigate through the disruption until you come out on the other side. As a result, you need to be prepared to act when a crisis hits. Here are some steps you can take to lead and innovate during turbulent times.
Make Fast Decisions
There will be times when you have to make quick decisions with little information. Although this may feel uncomfortable, you need to remain agile and proactive to get things done. Keep in mind that making the right choice based on what you know at the time is better than not taking action at all. If the results don’t turn out as expected, you can use the information you gain to make a different decision with potentially more favorable outcomes.
Model Appropriate Behavior
Display the type of mindset and actions you expect others to have. This includes maintaining a positive outlook and being proactive. After all, your response to what’s happening will influence how employees at all levels respond to a crisis both now and in the future. As a result, it’s in your best interest to make decisions and carry out plans with confidence. This will build a culture of buy-in that encourages everyone in your organization to continue to move forward.
Make sure that the safety and health of your people comes before anything else. After all, your employees, leaders, vendors, board, shareholders, and other stakeholders are what run the company. They provide the brainpower and drive that will help navigate through the turbulence and rebuild the organization later. So, be sure you consider how your stakeholders are likely to be affected and what you can do to protect them. Then, communicate and implement your plan so everyone understands the course of action. Keep in mind that they are looking to you for reassurance and next steps.
Communicate with your stakeholders as much as possible. Keep in mind that although some communication should be done over email, be sure you talk with individuals or groups either in person or over the phone whenever you can. For instance, set up a company-wide meeting to share the challenges and opportunities you need everyone to work together on. Include the information you know and don’t know, and when you should have more information to share with them. Also, provide reassurance that leadership is doing all they can to continue moving the company forward. Additionally, be sure to thank everyone for their contributions to keep the business going. Plus, call your vendors to see how you can help them. The more you show genuine concern for others, the more willing they will be to do their part to maintain operations.
Display empathy when interacting with employees. As human beings, they are affected during a crisis just like anyone else. For instance, ask your employees about their personal and professional challenges. Also, answer their questions to alleviate their concerns. Additionally, encourage your employees to ask for what they need. This may include flexibility with their work schedule or participation in an employer-sponsored program. Do what you can to make things better for everyone.
Make sure there are enough liquid assets to handle your worst-case scenario. For instance, back up your lines of credit, cash reserves, and contract terms with your customers, suppliers, and unions. Also, prepare a 13-week cash flow forecast so you know what needs to be covered and how much it will cost. Additionally, create an asset liquidation schedule showing your most liquid unencumbered assets, their anticipated liquidation value, and time frame to convert to cash. Plus, put together a 13-week crisis cash flow for leadership to review. Further, know which sources of cash you can quickly access, along with the order of priority and amount of cash needed.
Use your current supply and demand expectations to create a margin management plan. This includes updating your earnings forecast with new volumes, prices, cost of goods, and overheads. Your leadership team will be better able to understand the potential impact of the crisis and decide which action to take to sustain the business.
Determine what the biggest business risks are and how you can minimize them. This includes the potential impact on sales, the supply chain, procurement, production, and your stakeholders. Meet with leadership to discuss what changed, how it may impact the company, and what you can do about it. Then, create and implement an action plan.
Create a Forecast
Use the balance sheet to create a forecast. Then, make a list of financial commitments to shareholders, lenders, and other stakeholders. Next, conduct a sensitivity analysis to determine how the impact of different decisions may affect the business. After that, review the information with your CEO and leadership team to discuss which action to take. Then, if required by your corporate governance, review the reports and recommendations with your CEO and board of directors. Create and implement an action plan in line with the approved recommendations.
Talk with your leadership team about ways to increase revenue and decrease expenses. This may involve finding new avenues for your products or services or taking on projects you previously put off. Or, you might create new processes and systems to increase efficiencies.
Use Your Support System
Remember that your support system is there when you need it. As a human being, you cannot handle a crisis on your own. Whether you turn to your business partners, spouse, family, or friends, ask for their support to continue on. You need to let go of the stress in order to think clearly and effectively lead your company.
Recognize even the smallest victories. Whether personal or professional, acknowledge every success your employees at any level have. Be quick and generous with your praise to inspire and attract positive energy.
No matter what happens, taking action is what produces results. So, continue to build relationships, make decisions, and implement plans to maintain business operations. After all, the actions you and your team take and the results you produce will continue to build your reputation as a leader.