Winston Churchill famously said, “Never let a good crisis go to waste.” In the spirit of applying that sentiment to our times, we asked business leaders from JMH’s portfolio companies and members of our Executive Pool to share the critical strategic initiatives that they are undertaking to reposition their businesses during the ongoing COVID-19 pandemic.
Their answers were fantastic. There were also a lot of commonalities. Below is a summary of what these small and middle-market businesses are implementing that we thought might be helpful to share with you.
Overall, there was a common view that the pace of change in most industries is accelerating, and adaptability is becoming more important. Nearly all the executives we spoke with felt like the COVID-19 pandemic forced them to pull forward changes that already needed to take place. While every business and industry is different, we identified six things that our respondents all said they are focusing on to come out of this stronger:
1. Supply Chain Security and Adaptability: Nearly all of our respondents felt the pandemic has heightened their awareness of the strategic importance of their supply chain. Our fluid power products distributor has gained meaningful share by having in stock the products that are in immediate demand, while competitors with leaner inventory are left without product. A manufacturer in the jewelry segment shared that they are finding value-add up the supply chain. Now almost all of their product development and design is being done at the manufacturing source, leading to new cost savings and reduced lead times.
2. The Primacy of Customer Experience: It’s clear to everyone that the pandemic has accelerated the shift from retail to online, but nearly everybody across our network mentioned that B2B customers and end-users were migrating online for discovery and to e-commerce for buying. Many companies also indicated a renewed focus on improving their customer experience from changing the UX on their websites to developing new ways of delivering their products and services. A service provider in the restaurant business discussed the customer interface rapidly switching from a sit-down, high-end dine-in experience to a new model that focused on comfort food, take-out and delivery. An auto dealer referenced a new “touchless” buying process where their sales team creates a series of personalized videos of new and used vehicles, and then texts the videos to prospective buyers at home. Vehicle sales are up!
3. Focus on e-Commerce: Every executive we connected with indicated they have allocated additional capital and human resources to increase visibility online, some extending to their presence with retailers on e-commerce platforms and Amazon as well. All to more closely align with what they see as a new customer journey. And the consumer products businesses in the group also mentioned re-routing available funds into paid social and digital media to drive traffic to their webstores. One executive in the food segment claimed their new focus on online delivery resulted in 80% growth in the channel over the summer of 2020. The attention on e-commerce combined with supply chain focus has resulted in some companies specifically developing and routing new products, bundles, and package sizes specifically for e-commerce. Interestingly, nearly all the executives we interviewed also said they plan to put a greater emphasis on investing in technology improvements and e-commerce-related platforms in general.
4. Emphasis on Cultural Values & Communications: Nearly all of our small and mid-sized business leaders saw this crisis as an opportunity to emphasize the foundational values of the business, their vision and to re-affirm the business’ mission. They talked about increasing communications with internal teams and key stakeholders, and broadening the decision-making process across leaders. One executive at an environmental consulting services company discussed the pandemic as an opportunity to enroll their second level leaders in the difficult decisions. He felt that including the broader team created a forum for senior leaders to evaluate the second level leaders’ critical thinking skills while providing additional perspective to the senior team.
5. Improved Response Time and Flexibility: There was a clear understanding that businesses permanently need to be more flexible and fluid than in the past. Obviously, every executive noted the tremendous change we’ve witnessed across the economy in the newfound commitment to having employees work remotely. This meant overcoming the perceptions and disadvantages of working from home and seeing it translate to both improved lifestyle and increased productivity. Implementing these changes also resulted in reduced overhead and travel expenses. One particular area this new method of interaction is affecting companies is in the functional area of sales. Sales teams accustomed to face-to-face time and in-person appointments have had to devise new ways to engage customers who are reluctant to take in-person meetings. Another example, given by an apparel manufacturer, was to realize that remote communications allowed for more frequent engagement with customers and positioned the company to respond to customer demand more quickly and better position themselves for growth.
6. Renewed Focus on the Bottom Line. Many small and middle-market companies immediately understood the need for “runway” and that access to cash and a focus on profitability were key to survival. While they were unsure of how to influence and even forecast topline sales, they knew they could control the cost equation. For many companies in growth mode, profit was not always the singular priority. An executive running a high-growth ice cream business indicated that her team immediately started to manage their working capital, receivables, lines of credit, and indebtedness better. Another executive managing an outdoor recreational products company said they dramatically cut overhead, reducing overhead by more than 30%. “We realized that we had more overhead than we needed and made cuts to things we thought we couldn’t live without. Our profits increased by over 20%. Who would have thought!”
While much of this struck us as obvious, we felt there were insights embedded in the common areas of focus during these trying times. For more information on any of these topics or talk about how we can work together to support your capital needs and/or strengthen your business, give us a call any time.
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