The hardest part of planning for the long-term is seeing past the giant dollar sign directly in front of your face. It's huge. It's right there. It says everything is going just fine. It is also blocking your view of the cliff just ahead. COVID's business impact shows us why this is important.
80,000 businesses closed permanently between March 1st and July 25th of this year*. It looks like COVID is shuttering businesses left and right. But is it the only factor? Do business comorbidities exist like those which impact personal health? More importantly, is COVID masking a true business destroyer--allowing short-term indicators to define long-term strategies?
First, I want to say there are entire industries that could not have done anything differently. Live entertainment, bars & restaurants, hospitality, and airlines were hit hard by the impact of COVID and there really was nothing they could have done to prepare for it. For some businesses, however, COVID just happened to be the tipping point. If not COVID, it would have been something else. The tragic part is, the underlying issues were not only predictable but preventable. Take, for example, a company we'll call Associated Hauling.
The executives at Associated woke up every day and saw a company that was thriving in its second year. Revenue growth was exploding. Plans were made to expand the team so they could take on more work. Everyone was riding high on cloud 9. I came in as a consultant to help position them for growth and saw a completely different company. I saw further down the road and down that road I saw a business teetering on the brink of collapse.
There were a number of underlying issues that would not be evident in P&L numbers. The company was too reliant on a single large client. There was no sales process. Business development was focused on retaining existing clients and strip mining a rapidly depleting pool of existing contacts. The service did not differentiate the company adequately from the competition and no client niche had been defined. Strategy teetered between "differentiated player" and "low-cost leader" by the day. The business was successful but it was a mess.
I suggested a two avenue approach. First, take time to define the business and reevaluate existing clients through that lens. Second, actively work to expand the team's network and visibility as thought leaders, build a sales process, and fill the sales pipeline. I even found an opportunity for one of the corporate officers to participate in a highly visible panel at a large industry conference. The team wasn't interested. They needed to keep "Big Client" happy. Narrowing the scope of the service area would mean saying "no" on a few Big Client Locations. They didn't have the time to dedicate to developing new contacts. The CxO was going to be on vacation during that conference. Plus, they had plenty of work. Why look for more?
2020 was a one-two punch to Associated Hauling. Their major client decided to vertically integrate and handle their hauling internally. This left a huge hole in Associated's revenue stream. It was time to get out and drum up business, hit the conference circuit, time to take prospects to dinner... Oh, wait... COVID.
So, COVID caused another business to fold... but did it really? Yes, the business did fail during the quarantine. Yes, COVID protocols canceled some of the business development efforts that Associated wanted to pursue. But there was comorbidity--an ill-formed strategy and chronic short term thinking. COVID was not foreseeable by name but the other factors, the comorbidities, were visible and fixable. Ignoring those issues is what caused the business to fail. COVID just hastened the inevitable.
The hardest part of planning for the long-term is seeing past the giant dollar sign directly in front of your face. It's huge. It's right there. It says everything is going just fine. It is also blocking your view of the cliff just ahead.
*According to Yelp Data