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Jessica Borowy

Leadership in crisis: 10 tips for weathering the storm

By | Crisis Management, Resources | No Comments

We are in an unprecedented situation. Traditional crisis response tactics won’t be enough: the global shutdown is creating enormous disruptions, and we need to figure out how to get our businesses safely to the other side of the crisis. To set ourselves up to survive the ongoing storm, we need to act quickly and decisively. Here are 10 ways you can lead your organization through the crisis:

1. Be a leader, but be a human first. Act with empathy, flexibility and patience. People are stressed and scared. They have kids at home and mortgages to pay. Acknowledge their fears, reassure them whenever you can, and if you’re not sure about something, say so. Be willing to bend (or even toss) processes like PTO or sick leave to make people’s lives easier. And talk to them – tell them what’s happening in the company on a regular basis. Keeping them in the dark, even about tough choices you may have to make, will only make them more uncomfortable.

2. Set up a COVID-19 war room. Appoint a senior, multidisciplinary team dedicated to the task full-time. Empower them to make quick decisions and create critical action plans. Their role is to come up with contingency plans for all scenarios (including worst-case) and determine how to stabilize operations.

3. Get your working capital sorted. You’ve probably already taken significant cost-cutting measures, but now would be a good time to cut unprofitable customers, look at less expensive suppliers or ones with more flexible payment terms, and approach lenders for more lenient terms. Optimize your supply chain to reduce costs. Consider shutting down underperforming business units or geographies and take operations down to a smaller but higher-performing core.

4. Find out what parts of the relief bill you’re eligible for. Of the $2T CARES Act announced March 25, $370B has been allocated to small business loan and tax credit coverage through the SBA. Businesses with fewer than 500 employees can apply for a $2M Economic Injury Disaster Loan ($10K of the applied-for funds may be available within 10 days) and then can apply for a further loan of up to $10M with interest rates no higher than 4%. These loans are part of the Paycheck Protection Program – federally guaranteed loans that may be forgiven if borrowers maintain their payrolls during the crisis or restore them afterwards. We also encourage companies to study the CARES act as it relates to payroll tax credits and tax deferrals, for which you may also be eligible.

Get more info from the US Chamber of Commerce Small Business Guide and Checklist.

Businesses should consider applying for the EIDL as soon as possible. Apply directly to the SBA Disaster Assistance Program,  rather than through a bank. There’s no cost to apply and no obligation to take the loan if it’s offered. And it’s not just for sole proprietors – businesses with advanced ownership structures can also qualify. Visit the SBA Disaster Loan Application Portal to learn more and get started.

5. Stabilize your supply chain. Identify any risks including upstream risks, increase stock where you can, boost frequency of deliveries to ensure consistent supply, and qualify new suppliers in case your current ones are unable to fulfill their obligations.

6. Get ready for worst-case scenarios. If they don’t happen, great. But if they do, being prepared will make all the difference. Determine specific milestones that will trigger actions on your part, and put everything in place to ensure those actions can happen if and when you hit those milestones

7. Focus on the parts of your business you can grow now. Move your resources to where they’ll make the biggest difference. Identify the most profitable target markets and be aggressive with promotions and marketing to pull them in. Identify new revenue opportunities. Reach out to existing customers and late-stage leads in your pipeline.

8. Have a business continuity plan in place. If leaders or employees are unable to work because they’ve contracted the virus or are caring for sick family members, ensure plans are in place for operations to continue without interruption.

9. Plan for recovery. Although there are days when it may feel like this situation will last forever, it won’t. And now isn’t just the time to “stop the bleeding,” it’s an opportunity to figure out how you can set up your company to outperform competitors once the crisis is over. A lot of what you’re doing today to make operations more efficient will help you operate leaner in the future: for example, getting your supply chain in fighting shape now will give you greater agility, more capabilities and a cost advantage when COVID-19 is behind us.

10. Get ready for a permanent change in customer behavior. After this crisis, the world won’t be the same – and neither will business. Start planning now for a shift to digital solutions and automation. Adapt your technology and keep a sharp eye on changing trends, so you can invest wisely and drive the charge to capture market share.

We’re all in this together – and ORG is here and ready to help. Please reach out if we can be helpful in any way as you look to navigate these uncharted waters.

Jessica Borowy

Jessica Borowy is a Vice President in the Industry Group at Owner Resource Group (ORG). She is fortunate to meet with hundreds of business owners each year to learn about their unique goals and pursuits for the growth of their businesses. Outside of work, Jessica enjoys hiking and riding bikes with her husband and two rambunctious boys, and has a soft spot for Tex-Mex food and rescue dogs.

6 things to think about before a business transition

By | Business Transition | No Comments

You’ve put a lot of sweat equity into your business, and you’re invested (both financially and emotionally) in seeing it succeed. But what happens when you want to step back a bit – or step down completely? What if the competitive landscape in your industry has changed and you must adapt? Are you up for the challenge at this point in your life? Do you want to give loyal employees the opportunity to take on these challenges – or start passing the torch on to the next generation of family members?

There are lots of reasons for a business to go through a transition. You could be looking to retire, scale down, start a new chapter, or get some cash to expand. You could be in conflict with your business partners, or facing a personal issue that needs more attention than you can give it in your current ownership role. Whatever your reason, putting some serious thought into what a transition could look like can help you help you determine the right solution.

Here are six things to think about as you plan:

1. What’s your goal for the business?

Are you looking to transition ownership to a family member, partner or employee – or create ownership opportunities for your management team? Do you want to keep leading the company, but need a partner with additional capital such as a private equity firm to take it to the next phase? Are you looking to get top dollar for the business right now and walk away, or keep some skin in the game to be part of additional growth opportunities? The answers to these questions will determine what kind of transition plan will work best for your company – and for you.

2. How much of a role will you want to play moving forward?

Are you stepping up, stepping back or stepping down? How much are you willing to sell, exactly? All? Most? Minority share? All of these options have trade-offs. Buyers and investors will often stipulate that you stay for a certain period of time to help with the transition – and for the sake of continuity and consistency. There are a number of reasons you might want to continue on in an active role: it’s still your passion, you want to mentor your team to eventually take over, or you want to see your legacy is maintained.

But you have options: do you want to continue leading the company, but bring on a partner who can share the risk and provide additional guidance? Alternatively, would a consultant, board member or Chairman role work better? Or are you willing to stick around for a year or two, then transition out sooner rather than later? The choice depends on your agreement with the buyer/investor. But it’s important to know you do have a choice; options for transitioning are on a spectrum, not an all-or-nothing deal. Look for a partner with the flexibility to accommodate your specific needs.

3. Is your management team (or family) ready for big change?

A successful sale or partnership with a private equity firm hinges on your company’s potential to succeed post-transition. Does your management team have that capability? Do they have a cohesive vision for the company’s future or do they have conflicting opinions? Or is there disharmony between family members, or perhaps family outside the business that might feel like they aren’t being treated fairly? These factors all impact the transition – and your attractiveness to a buyer or investor. Alternatively, selling to a strategic buyer (i.e. your competitor) takes away your ability to control what happens to the business and employees posttransaction.

4. What will happen to your employees?

How will the transition impact their job security – and their morale? Are there certain people you feel are critical to the operation? Do you want to protect employees who have served the company for decades? Whether you’re selling your business outright or bringing in an investment partner, there may be human capital decisions made in service to operational improvements. If you want to be part of those decisions, selling to a competitor may not give you that option. On the other hand, partnering with a private equity firm can give you more flexibility. Take the time to explore potential buyers/partners to find one that aligns with your goals and philosophy.

5. If you partner with a private equity firm, will the business succeed moving forward?

What’s the market like in your industry? Is it consolidating quickly? Is your company growing or standing still? How do you need to position your business to succeed in today’s marketplace? One of the benefits of partnering with a PE firm is that they can help you position your company for growth. They’ll help identify new markets, look at strategic acquisition opportunities, invest in marketing, streamline processes, bring on new customers, enhance your product and service lineup and more. Be careful here though; all private equity firms are not created equal. They all have different approaches to debt, level of operational involvement (i.e. how much control you/management have to run the business), appetites for ongoing investment, and other factors. Make sure you identify a partner that aligns with your vision – and check their references!

6. What are the tax implications of your transition?

Depending how the deal is structured, a business transition can have very different tax impacts for you, the business and its shareholders. Do your research to see what your options are: most private equity firms will seek to minimize your tax impact, but bringing on a CPA or tax attorney is a good bet for making informed decisions.

We talk to hundreds of founder/owners.

We know the reasons for transitioning are as unique as the people involved, and understand that your business isn’t just, well, business. It’s your legacy. It’s your identity. And it’s a living, breathing reminder of how hard you’ve worked and the success you have achieved. The last thing you want is someone to come in and take over without understanding its beating heart.

That’s why we do things differently at ORG: we dive deep into your industry and develop a close relationship with you to build a solid understanding of your specific needs and goals. Then we work with you to meet those goals, whether it’s enabling you to continue to invest in growth, diversify your personal portfolio a bit, or step back some so you can enjoy life.

Got you thinking? 

Hoping to take your business to the next level – or take the next step towards retirement? Contact us at 512.320.4086 or to discuss the various options for achieving your goals.