The CEO’s guide to leading a business through COVID-19

| July 3, 2020

Three months ago, businesses were focusing on growth and investment. Because of COVID-19, they are now focused on just one thing: survival – through the pandemic and beyond. CEOs are in crisis mode and are having to become crisis managers.

As a turnaround consultant, crisis management is how I describe what I do – ordinary management in a time of crisis or financial distress. Unfortunately, there is not a linear process to follow in crisis management and it becomes more of a triage situation. That’s why we use a triage method at Byronvale Advisors – to assess a business and determine a course of actions to take it to good health. In any triage, the first step is diagnostics, followed by emergency management, and then ongoing strategic management.

Diagnostic step

The first step is a diagnostic review of the business. It is an information gathering and assessment step, not a forward management step. The focus in the diagnostic review is the present situation, meaning the focus has to shift primarily towards working capital management – inventory turn, debtor days, creditor days, overheads, employee entitlements, funding levels and sources and cash flow management.

Along with working capital issues, I would also look at the business as if the present initiatives of government support and assistance were not available, because government support may have morphed your business into a ‘Zombie Company’, which is a term used for a firm unable to stand on its own feet – it either needs one or a series of bailouts, or is kept afloat by lenient creditors and below-market interest rates.

Many businesses are just ‘surviving’ through the pandemic with the various Federal and State government support packages as well as industry, banking and rental support. Are they just holding on until the support runs out? Would they be better off closing now and providing a better return to stakeholders than holding on? Or, with the help of a turnaround consultant, be leveraging the time the support packages have given them to focus on turning their business around?

With no diagnosis, it’s impossible to know exactly how perilously close your business is to becoming a zombie, or worse, insolvent. Furthermore, the information you gain from your diagnosis will help you along the emergency and strategic steps.

Emergency management step

Armed with information from the diagnostic step, the emergency step aims to address the critical business-threatening matters, changing the trajectory, and stabilising the organisation.


Cash is the lifeblood of any business. You may have heard the phrase “turnover is vanity, profit is sanity, cash is a reality”. The most immediate emergency action is management of the cashflow. With expenses, act hard and fast and grow slow and steady. With creditors, banks, financiers, and investors, communication is the key. Have open, honest, mature, and regular conversations with them. Burying your head in the sand and hoping issues will disappear will exacerbate any problem.


Talk and communicate with your staff too. During times of crisis when information is unavailable or inconsistent and when people feel unsure about what they know (or anyone knows), behavioural science points to an increased human desire for transparency, guidance, and making sense out of what has happened.

At such times, a leader’s words and actions can help keep people safe, help them adjust and cope emotionally, and finally, help them put their experience into context—and eventually draw meaning from it.

Safe Harbour

One option for businesses in financial distress and facing potential insolvent trading to consider is utilising the safe harbour provisions of the Corporations Act. It allows directors to undertake informal restructuring and turnaround of their company if they have a reasonable expectation it will lead to a better outcome than being placed into a formal insolvency situation. The control of the company remains with the directors for the benefit of all stakeholders – shareholders, banks, customers, employees, financiers, investors, and creditors.

Two of the key requirements to avail the use of Safe Harbour are having a restructuring/turnaround plan and having the assistance of a restructuring advisor. Having a plan and turnaround mindset are key for success and essential for the CEO to embrace in the emergency step of managing through the pandemic.

Getting help

Another thing that can make an immense difference is getting help early. A commercial lending broker gave me the analogy that a struggling business is like a car with a flat battery. If you keep the car running, even with a sick battery, it will keep going. If you let it stop, it will either be hard to restart the car – or you won’t be able to restart it at all. Likewise, it is easier to keep a business going while it is still going than after it is put into administration. Getting help early will give your business a better chance to come out of the pandemic in a better state.

Diversification and pivoting

As I mentioned earlier, the decision-making steps are not linear – and one of those decisions is around diversification and pivoting. During the pandemic we have observed a sizable amount of business diversification and pivoting. Car manufacturers making respirators, exotic mushroom farmers selling DIY home kits, businesses opening online stores, and even taxi drivers delivering parcels.

Diversification is not a new concept and remains a fundamental principle of sound investment strategy. While most businesses ‘kept to their knitting’ before COVID-19, I think there will be a focus on diversification and dexterousness to pivot after the pandemic.

Businesses at the emergency step should also start considering the future of the business. A question to consider is, ‘if by going into liquidation now rather than continue trading will I preserve some equity?’ If yes, and there is no desire and passion to turn the business around, then this may be a better option than carrying on. Some banks are already putting together ‘workout’ teams to assist businesses through this decision-making process.

Ongoing strategic management

The third step of managing through the crisis of COVID-19 is working on the business and how it will look post-pandemic or post-government support.

Planning is important in each step. Abraham Lincoln said, “If I had six hours to chop down a tree, I’d spend the first four hours sharpening the axe”. The axe is a strength multiplier. You can be the strongest lumberjack in the world, but with a dull axe, you’re in trouble.

Planning should include a strategic plan – and then the operational and financial plans should follow out of the strategic plan. Even if you had a strategic plan pre-pandemic, it needs to be reviewed and perhaps redeveloped.

One plan that many businesses did not have at the start of the pandemic was a business continuity plan. For large corporations, business continuity planning (BCP) or disaster recovery planning (DRP) have been a standard practice and they would even have regular simulation exercises and drills.

For most small and medium-sized businesses, having a BCP or DRP before COVID-19 would have seemed like a luxury and an unnecessary expense. Through COVID-19 and beyond, decision making will change and while businesses may still not invest in BCPs and DRPs, they will change their business decision-making from the sourcing of supplies to staffing and IT solutions.

Another approach is to develop a detailed post-pandemic relaunch map – country by country, site by site, segment by segment, customer by customer and product by product. As avid users and advocates of the relaunch map, McKinsey says it helps guide production, supply chain, marketing and sales, and determine actions and timelines. It will also help the CEO reassess investments, resource allocation and valuechains.

Without customers, no business will survive – at any time. Businesses will need to revive their customer base and then stimulate demand. They should focus on some of these areas:

  • Identify and capture pockets of profitable
  • Adopt tactical pricing to create favourable conditions for a rebound in consumption while not eroding the value
  • Helpcoreandkeycustomerswithsolvability–theirsolvencywillhelpyousecure
  • Optimise your marketing to ensure your offering is in line with the crisis-related shift in demand.

Any triage still requires support from trusted consultants, family and friends. I believe every business – large or small, public or private, closely held or not – is a family business. Decisions and issues you make at work affect your family and friends, your employees’ families and friends, your creditors and customers and their families and friends. Conversely, decisions and issues at home impact business too. Get the right support – family, friends, colleagues, and also get the right support from the right consultants and crisis managers.

How is your business going to do things differently post COVID-19?

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