Triage – a medical approach for businesses with Covid 19 difficulties.

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Triage – a medical approach for businesses with Covid 19 difficulties.

  • Posted by: Tom Murray
  • Category: Uncategorized

This is an immediate and urgent crisis for Ireland’s SME businesses.

The social distancing measures being suggested by Government and being implemented throughout the country (and the “lockdown” that is most likely on the way) are only going to dramatically exacerbate a business environment which is increasingly volatile and unpredictable in the weeks and months ahead.

If it was not already apparent, it became crystal clear to me on Wednesday morning just gone just how serious this was going to be.

As I took a taxi to a meeting, the driver told me that at 7.00am that morning, there were three people looking for a taxi when on a normal morning there would be well over a hundred people in the Dublin 2/4 area looking for transport to work and meetings.

Over the course of the following 48 hours as government advice issued, I cancelled

  • a long planned family holiday
  • the dog kennels
  • a reservation in a local family run restaurant
  • family weekend activities

Furthermore, I also did not drop in my shirts in for pressing for the following week and stopped going to the gym. As is apparent from my photograph, I am not one who troubles a barber, but my wife was forced to cancel her regular hair appointment.  

All of these actions taken on the back of necessary government advice affected small businesses. I was not alone in taking such actions.

It is less a case of “six degrees of Kevin Bacon” but more like “numerous impacts of Covid 19” as the cumulative impacts affects our SME’s. And lest we forget SME’s are the backbone of our economy, and account for over 99% of active enterprises in Ireland and 65% (over one million) of total employees, which increases to 68.4% when proprietors and family members engaged in the SME are included.

As someone who has worked on corporate restructuring and insolvency for many many years I have worked with and helped companies impacted by 9/11 and the financial crisis in 2008. As with those events, this too will pass. However, the impact will be felt and many companies will suffer and some will fail.

In my experience generally – companies which fail – go through a number of stages  / phases over a period of years before they become insolvent. It can be a slow, almost imperceptible decline where their business strategy stops working and possibly fails directly impacting their profitability. A sustained impact on their profitability leads to a liquidity crisis.  

Ultimately, “nearly” (for there is always exceptions to a rule) all the companies which fail experience a shortage of liquidity where it does not have the necessary monetary resources to continue trading.

With Covid 19 – a number of stages, it not all of the stages, will be skipped with the imposed disappearance of markets and customers and a liquidity crisis is imminently facing large swathes of our business community.

We are witnessing first-hand the remarkable and selfless work being undertaken by the staff of our health service in preparing for and fighting the personal impact of the virus on individuals, families, and society as a whole.

Key to dealing with the crisis (or any crisis) in a health care environment is “Triage”. The term comes from the French verb “trier”, meaning to separate, sort, shift or select.

In a medical environment – it is in effect the process of determining the priority of patients’ treatments based on the severity of their condition and leads to the rationing of patient treatment efficiently when resources are insufficient for all to be treated immediately.

At times of crisis a clear head is required. It is my unequivocal advice based on a cumulative 100+ years’ experience of the leadership team in Friel Stafford, that in these volatile and unpredictable business environment that business owners need to adopt a “triage” style approach to determine and assess the severity of their business situation and plot a way forward in the immediate weeks and months ahead.

Business owners need to create an initial view of how to survive the short term and stabilise for the medium / long term.

PERFORM A BUSINESS TRIAGE TO ISOLATE CRITICAL AREAS

Start with “Financial Triage” – you need to get the pulse and vital signs of the business.

Business owners need to generate a clear picture of the company’s financial situation. 

In this context, they need to identify its immediate financial priorities and simply need to take control where possible of cash flow.

In doing this business owners need sit down and prepare a fully transparent view of the companies 6 to 12 weeks cash flow. This will lead to them to focus on identifying short term quick “wins” through reducing coats and cutting unnecessary expense’s.

It is critical that the company on the back of this cash flow exercise implement quick, rapid, timely measures to free up cash flow and stop the haemorrhaging of cash.

Next business owners need to carry out a “Market Triage” – what is happening in the market for their goods and services. Your market determines your sales and revenues which is the oxygen and blood supply for the business.

In this regard, a business needs to set short term targets with simple roadmap to enable you navigate the changing environment. This may involve changing a business proposition by making sure it’s offering is appropriate for the current market conditions.

 “Organizational Triage”evaluates the structures within the organisation necessary to support the delivery systems. At this stage a business needs to simplify the business processes and organisation. 

This is the right time to reduce overheads and cut out waste. With regard to staff, letting staff go may be the first reaction. However, experience has shown that those companies who can reduce time worked or salaries rather than lose key knowledge or skillsets through redundancies will be better prepared to grow when market conditions improve.  

You also need to make sure you have the “right team” in place. You may need to bring in the support of a turnaround specialist with experience of turning around a business.

Critical for many companies will be an “Operations Triage”– explores where there is a fulfilment problem. This will be a core issue for a business that heavily relies on the importation of product / components where the simple availability may be compromised (i.e. product from China) and “western” alternatives are prohibitively expensive

APPLY THE CRITICAL INFORMATION

Armed with the knowledge at hand you need to then focus clearly on the critical areas. This will included deploying staff in teams with a clear focus on vital issues and the short term “wins” with a clear understanding to ignore the “more” trivial many matters that normally would take up time and resources.

It is critical that you establish measurements to monitor the progress of the improvements (or not) on a daily / weekly basis and implement continuous review and improvement steps to make sure you stay on top of the situation.

COMMUNICATE

Crucially – “Communicate”. This is a national and global crisis. Every business we know is affected. We are all in this together.

Where commercially possible communicate the actions you are taking to all key stakeholders and participants to allay fears and to explain that recognise and are taking proactive action to sustain the viability of your company.

 If you have any concerns about the insolvency of your business contact me, @jimstafford or @andrewhendrick on our free confidential helpline on 01 – 661 4066 or by email at tom.murray@frielstafford.ie

Author: Tom Murray