If you own a business, a little uncertainty can be exciting.

However, too much uncertainty can be paralyzing.

Your business may be in lockdown, but it doesn’t mean you have to be. While you are waiting to hear about government bailout packages and vaccine development, as an owner, you can be working on parts of your business that are still within your control. Addressing these three areas will help minimize uncertainty and help you be better prepared for when the economy starts moving again.

The first three areas for a business owner to address in this crisis:

  1. Communication: There is a sphere of influence around your business. An entire universe that is affected by the shutdown. These people rely on you as much as you rely on them. Suppliers, employees, customers, creditors, investors, legal counsel, and accountants all touch your business in one way or another. In this time of crisis it is critical to stay in active communication with all of them. What should you be saying to them? Very little. Right now, your task is to listen.

Call all of them. Make a human connection with your voice. Ask them how they are doing personally. Ask them about their business. Find out what they need from you. Don’t promise anything – just listen. The only thing that you can offer is a commitment to trying your best. Why can’t you commit more than that? Because no one knows how this virus and its effect on the world will continue to manifest. Right now, you’re in a crisis; the worst thing to do is promise things that you can’t deliver. Your immediate task is to pick up the phone, ask questions, and listen.

Once you have found about their needs, ask them questions about your business. Gather their opinions on areas such as: what they think is great about your company, what distinguishes you from competitors, what are areas of weakness, what are things that definitely should change. Now is the time to put away your ego and just listen to what the sphere around your company is telling you. Each group and each person will have a different perspective, but hopefully from this data gathering you can find several commonalities both negative and positive. In this process, all of these people will be reassured and comforted from talking with you and your willingness to listen to their concerns. And, in turn, you will have a lot more front-line data that you can use to improve your business.

  1. Prioritization: Now that you’ve gathered data from all of the constituents around your business, you need to prepare for survival. We don’t know what tomorrow or the rest of the week or even month will bring in terms of resolving this crisis, so we’re going to begin by planning for the worst. You begin by asking yourself: What is my most profitable product or service? And: What product or service distinguishes me from my competitors? Next, you will prepare a list of supplies and actions needed to construct and deliver those items. Take out your ledger and break all of your expenses into three categories: a) critical, b) essential, c) non-essential.

Critical expenses are defined as those things that your business absolutely needs to make your best and most profitable items. For example, electricity is critical to most businesses. Some items will seem obvious, some won’t. You need to question every single line item, analyzing whether it is actually critical to your business operations. For example, rent. Most people think rent is critical. Generally, it is. You need a place to operate your business. However, in a crisis, is rent a critical expense? Or, could it be moved to “essential” because you might have the option of delaying your rent payment, renegotiating your lease, or moving to a less expensive location. There is no clear-cut answer; each line item is different for every business.

  1. Cash Flow: Once you have your list in three categories – critical, essential, and non-essential – you will need to prepare a 13-week cash flow projection. Most business owners do not use cash-flow projections because they don’t think they need them. Most owners rely on profit and loss statements. These statements are generally prepared at the end of the month. They’re good at telling you what happened in your business in the past. However, they are of little use in helping you anticipate the future cash needs of your company. In a crisis, understanding the flow of cash is far more important than understanding profit and loss. The flow of cash is what will help you manage risk, keep you alive, and guide you back to a healthy position.

The 13-week cash-flow projection does precisely what it says it should do; it outlines the timing and amounts of cash coming in and out of the business each week.

At this stage we’re going to plan three scenarios: a) Worst, b) Bumpy Road, c) Back to Normal.

For each one of these scenarios, you will begin with the prioritization list you prepared (critical, essential, and non-essential). Each cash-flow model will begin with the “critical” expenses. In the “Worst” scenario, you will assume little to no revenue for several weeks or even months. Plug in how much cash you will need just to keep the business alive until the crisis passes. And then phase in, if possible, the critical expenses you need to generate some revenue. In this scenario, you may not be bringing in much revenue but this model will help you anticipate the amount of money you need to borrow or generate through other actions just so you can stay alive; e.g., selling of assets, collecting receivables, restructuring of existing debt.

In the “Bumpy Road” scenario, you should assume that business will resume but it will take some time. How long? No one knows. All you can do is write down the best and most logical assumptions you can think of right now. If you can, involve other key members of your team in this process. Talk through daily and weekly activities and then put numbers into each category. A great feature of the 13-week cash-flow projection is that it can be modified each week. Once you have the actual cash flow from the previous week, you can then modify the future numbers to reflect the evolving economic environment.

In the “Back to Normal” scenario it should contain typical business activities and revenue; however, because of the nature of this crisis, all of us may experience a “new normal.” Medical specialists tell us that the virus will be around for an extended period of time. Estimates are anywhere from 6-18 months. If this is true, you will need to think through how this may affect your particular business. Will it add extra steps and extra cost to your daily operations? If so, they should be included as expenses in the model.

At this moment, your business is surrounded by a tremendous amount of uncertainty, but that doesn’t mean you have to be paralyzed by it. Focus on the items you can control and prepare for different economic scenarios. Start with comprehensive communication, critical prioritization and 13-week cash flow projections – these actions will help you and your entire sphere of influence be significantly better prepared for whatever comes next.

And, if you’re still stuck, call me.