I heard Alex Rodriguez on a podcast with Gary Vaynerchuck yesterday and he made a great point about the current times. He said that Joe Torre would tell him during a rain delay that the players that went to the back and ate burgers during the rain delay wouldn’t perform as well after the delay as the players who kept their head in the game, rode the bike to stay warm, etc. Joe said it was important to prepare for the future.
What type of player do you want to be? Now before I continue, I am not a Yankees fan. I grew up watching the Big Red Machine (the Reds) in the seventies. But these are sage words from arguably two of the greatest to be involved in baseball.
Alex has become a very successful businessman now, and he mentioned that the current COVID-19 situation is just a rain delay. What are you going to do with your business during this time? Are you going to go eat burgers or prepare for the future?
Here five steps you can take to prepare for the future:
1. Contact your customers
Now is the time to pick up the phone and have a conversation with your customers. All of them. Find out how they are doing. Ask if there are other ways you can assist them. There could be people in your network that could assist them. Let them know that your company is there for them.
Make sure you pick up the phone yourself. It’s great that you might have your sales team reach out, but it is often at the salesperson to the buyer level. Have a business owner to business owner or CEO to CEO conversation.
2. Conduct a Pareto analysis of your top products
Yes, some companies have pivoted to making masks and ventilators to support the fight against COVID-19. There will come a time when demand for these items will tail off and it’s important that you understand your top items and focus on those.
Why? Most likely companies will continue to order your best sellers. That probably won’t change. By developing a Pareto analysis (80-20 rule) you can focus remaining efforts on becoming more efficient in producing those items.
You can develop flow lines and use pull systems on these items to improve cash flow. I have written a series of blogs and done many podcasts about using pull systems to improve cash flow.
3. Develop a Lean Game Plan
There are four steps to my Lean Game Plan to keep it simple. As A-Rod said, this is a rain delay. Take the time to keep your head in the game. You can accomplish a lot in less time because you aren’t fighting as many fires right now. Imagine what your business will be like if much of the waste is removed from your processes. What market share can you gain with improved quality, reduced cost, and better on-time delivery?
4. Invest in Technology
While this sounds counter-intuitive given the thought process of holding onto cash. Machine manufacturers are being very aggressive right now with pricing. I have a client that pulled the trigger two weeks ago on a new machine they were contemplating and they saved $65,000.
My bet is, as time moves on incentives will increase in the form of tax breaks to purchase capital equipment. I know it happened after 2008 and my bet it will happen again. Identify equipment that you want to replace and make it happen.
5. Have open communication with your employees
I hope that you are a leader that is not afraid to have open conversations with your staff. The one thing the human mind does not like is uncertainty. Typically our minds will develop all kinds of worst-case scenarios when in reality only 4% of what we fear will happen.
Let employees know this is a time to band together to make the organization better than before. Include employees in the decision-making process. Invite their perspectives. You might be surprised by what you learn!
As always, it is an honor to serve you and I hope that you and your company are getting better every day!
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