Amid Widespread Shutdown, Are You Working a Plan?
This column comes straight from the past — about two weeks ago, if you hold this magazine in the first days of April after it publishes. As I write this, I shrug to think about what two weeks from now might look like. Who knows?
The likely outlook as you read this: We all feel stir crazy after two weeks at home. A recession may start showing in the numbers (like new claims for unemployment) as people try to get a handle on the economic impact of COVID-19. We may know by now if schools will remain closed through the end of the school year, and whether other cancellations like trade shows will continue past the end of the second quarter. We could have a sense of whether all this isolation has “flattened the curve” enough.
But we may not know any of these things for certain.
I wrote in this space a few months ago about just this scenario. The crux of that column:
Contractors who expect and plan for the unexpected — who plan from day one for extended periods of business hardship — are the ones who make it past that critical five-year mark. How do you do that? The answer remains the same, whether monthly gross is $10,000 or $10 million. Keep costs low and cash on hand, and pay down debt with every scrap of revenue you can spare.
Ask yourself, as we sit here going into the third week of an unprecedented shutdown of the United States economy, did you plan for the unexpected?
Of Course I Planned for This
Congratulations. You have three, four, maybe six months of savings in your business. You can even furlough your crews with some sort of compensation. As long as you have contracts to invoice again by August or so, your company should weather the storm. Of course, it’s going to hurt. Everyone has it tough. But, you’ll make it and will have done right by the employees depending on you.
I hope that, looking out from the bunker where you’ve sheltered in place with your family for the last couple of weeks, you have the confidence that you made a plan and can stick to it. Low debt service means that rainy day fund lasts for several months. Then, you pick up where you left off and get to work.
Who Could Have Seen This Coming?
Folks asking this question likely fell short with their preparations. No one saw a pandemic coming that would cease virtually all commerce in the U.S. But some people looked ahead and thought something could happen. They just didn’t know what. Those planners did what they could to lower costs, build up cash on hand and pay down debt.
Folks who didn’t expect that something could happen likely didn’t plan for something they didn’t expect. What do they do now? They have to make uncomfortable or risky business decisions because they ran out of options. They have to hope they can make it until revenue starts coming in again. And they have to learn a hard lesson about planning.
What do you think? Does this pandemic slowdown threaten your business? Or are you working a plan you put in place with confidence? Let us know. Send an email to firstname.lastname@example.org.
Stay safe out there, drillers.