I’m not going to predict the future, so don’t read this hoping for some voodoo magic. I am keenly aware that retailers are struggling across the globe, even those with strong online presences are seeing their businesses shut down by “stay home” orders. The next 30 days will not be good for almost all businesses, but let’s not focus on the short-term. The best way of thinking is to prepare for the long-term in perspective.
I am going to draw on some of the lessons I learned from the 2008 recession and its impact, as well as some of my current thinking as I play a bit of armchair quarterback watching from the sidelines.
First and foremost, think long-term. This requires you to focus beyond the crisis in front of you and be prepared for the other side. I’m not saying that worrying about cash flow and laying off staff is just forgotten, those things will still happen where necessary, but with all that in mind, think about what your business will look like in 60-90 days.
What I learned in 2008/2009 was that many of my competitors were slashing inventory levels to free up current cash positions. What ended up happening to them when things started to turn around was that they had no inventory and no quick way to get it. For most retailers, you are not buying on-demand, especially in fashion where you are buying 6-12 months ahead of time. Once you react you cannot easily go back, especially if a competitor is picking up your canceled orders at major discounts. They are not only getting available inventory but also increasing their margins, all at your expense. Now, I am not saying to go out there and necessarily load up, just a warning that when things improve you will need inventory to sell.
Second, take care of your employees. You might have to lay people off, but make sure you treat them as temporary layoffs. Your goal should be to bring back all good employees. How you treat them and what you tell them now will go a long way when you need them back. In many cases, laying them off is better for everyone. First, it protects the company so that there is something to come back to, and second, it gives them access to government assistance programs. At the same time, do not hold back on performance issues. While it is logical to feel bad for letting someone who is under-performing go, it is also important to realize that your only job is to protect the company and your employees. Bad performers are not going to suddenly be better and now is not the time for any distractions.
Lastly, and probably most importantly, take care of yourself. There is a lot of research and writing out there about the mental health of CEOs. The stress endured is real, and while many will hold back and not admit to struggling, it is important that you find outlets. Here is a great HBR podcast on the subject. This podcast is just on the general topic, amplify that with what is currently going on and you get a better idea of what your peers are feeling. It is fine to feel the same way. My personal advice is to stop watching the news and keep your interaction with news sites to a minimum. What is happening is way outside of your control and adding angst isn’t going to help you mentally. Some things that I do to clear my mind: run, play PS4, listen to podcasts, puzzles (although everywhere is sold out of them right now). Of course, reality comes back even after you mentally get away, but the break is always refreshing.
I look forward to getting back to writing about everyday normal topics, not about the skidding economy or working from home. This new normal isn’t as enjoyable to read or write about, but hopefully, I offer some help, even if you merely go out and buy a puzzle.