If your company was lucky enough to survive the pandemic, you probably breathed a big sigh of relief. But if luck is what got you through, you are not out of the woods yet. Luck is not a strategy. Luck is not what will get you through the next time.

The next time you say? Sure, Covid-19 was a once in a generation pandemic. It would be easy to shrug that off as something unlikely to happen again in our lifetime. And perhaps it is. But the Covid-19 pandemic should be a metaphor for any unlikely event that could happen to your business. It should be a lesson that preparing for “the unlikely” is what you need to be doing right now.

What “unlikely” events can you think of? I can easily think of many. Here are just a few:

• A new competitor emerges out of the blue with a product that completely replaces yours at half the cost. 
• The government passes a new law that restricts or eliminates your competitive advantages. Maybe it eliminates all patent protections. Maybe it imposes new taxes on any product that doesn’t further the green agenda. Maybe it decides your company has violated anti-trust law. The point is, if I learned anything from the pandemic, it is that the government can do anything it wants, any time it wants.
• Your employees stage a walk-out leaving you with unreasonable demands for cost increases you cannot afford. 

If you think most of these scenarios are unlikely, you may be right. But then again, so was the Covid-19 pandemic. So, you better be prepared for the “unlikely”. So how do you do that?

A common denominator in all of the unlikely scenarios is a massive, sudden, and unexpected cut in sales. There is only one way to deal with that. And it is called a strong balance sheet.

The most important thing you can do to prepare for the next pandemic is shore it up. Reduce debt. Cut back on non-essential expenses. Resist the urge to make big bets on the future. Don’t spend on anything that doesn’t have a return in 12-18 months. 

I know what you are thinking. If I do all that, I am putting the future of the company at risk. What about strategic planning?

My definition of strategic planning is this: It costs a lot of money, takes a lot of time, and results in little more than a thick book you put on the shelf and dust it off in 3 years.

There is no future for your company if you cannot survive today. I once worked in a turnaround. We had to choose between making payroll or paying the utility bill. Cash was king. We weren’t thinking about 3 years out. We were thinking about 3 days out.

That taught me to always have tight awareness and control of every aspect of the business. I carefully monitored sales on a daily basis. Not monthly, and not quarterly, but daily. If daily sales were below what they should be for more than a few days, I was asking hard questions of my sales team. You need a very early warning of a sales crisis.

My philosophy then, as it is now is this: Make your numbers today and you will make your numbers tomorrow. Make your numbers this week, and you will make them this month. Don’t buy into the idea that if you miss a quarter, you can make it up next quarter. 

Think the unthinkable. Prepare for the unimaginable. Here is an example. I sit on a healthcare Board. Just before the pandemic one of our members asked what we would do if suddenly we couldn’t perform elective surgical procedures, which produce a significant amount of revenue. Most people in the room, including me, thought that was such an improbable event that it wasn’t worth planning for. Guess what, that is exactly what happened several months later. That taught me that as painful and uncomfortable as it may be, planning for the improbable is an essential part preparing for your next crisis. 

And make no mistake. Your next crisis is on the way. It isn’t a matter of if, but when. You need to put as much effort into planning for that as you do in planning for anything else in the business. Any plan you create for a crisis needs to include quick, decisive reductions of operating expenses and headcount. Do not hesitate when a crisis occurs. Waiting and hoping for the best is not a good strategy. Every day you delay expense reductions is a day of lost profit that you can never regain. Once profit is gone, it is gone for good. 

Don’t make the mistake of only planning for growth and good times. Take the blinders off and plan for the worst times as well.

Written by Steven L. Blue.
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