Yes, according to Jim Griffin, MD of automotive parts manufacturer Interflex
The British automotive industry has had its fair share of highs and lows during the 30 plus years that I have worked in the sector. So, the CEOs and MDs of automotive companies are probably as well placed as any to deal with a crisis. Certainly, my experience of recession and difficult times has proven to be a great training ground for the challenges of the Covid-19 crisis.
Of course, the current situation is unlike any other, but there are lessons that can be learned from the 2008 recession - and some fundamental principles and strategies that can help keep businesses afloat during these difficult times.
Lead by example
Whatever your title, if you are the leader of a team or company, you set the tone. Exude panic or despair, and your staff will pick up on those emotions and they will filter down throughout your organisation. So, it's crucial to remain calm and make rational, practical decisions.
It's also important to be truthful. It may not be appropriate to share all the details, but clear, honest communication with staff and customers is critical at times of crisis. This strategy worked well at my previous company during the 2008 recession. Our cashflow was non-existent and as MD, I explained that to the staff. However, they were also told that we had a viable survival plan in place and that although they were being laid off, this was temporary. It was made clear that when they returned to work, employees would have the opportunity to make up the wages they had lost through overtime before any new staff were hired.
In our current situation, we have had to furlough some staff but have ensured we stay in touch by making regular calls to our furloughed workers. The point of this communication is twofold: to ensure that they are OK, and also to reinforce the message that we have plans to continue working - and even growing - after the forced closure, so we are ready to hit the ground running.
Thinking long term
It can be hard to think long term during a recession or when cashflow is tight. However, while short term survival may be the most pressing goal, it's important to retain a long-term vision - and to share that with your team. That's why, during the 2008 recession when many companies were downsizing, at my previous company Autins I implemented an ambitious programme of investment and expansion. We bought new equipment which enabled us to bring many processes in-house, as well as opening new sites overseas. This sent a message of optimism as well as paying dividends as a business strategy by enabling us to operate more efficiently and opening up new markets. However, it does take courage to borrow money and/or invest at a time when the economy is unpredictable, and it needs to be done as part of a viable, reasoned and well-costed strategy.
A fresh pair of eyes
One of the advantages of a crisis is that it forces us to look at things differently - maybe to see opportunities that we may have overlooked or to identify new (and possibly better) ways of doing things. For example, when writing our business plan during the 2008 recession, we identified an over exposure in the UK automotive market and decided to dilute our dependence on one market and/or customer. As a result, we decided to repeat the core business in overseas markets with much success, as well as diversifying into other markets such as flooring.
In the current situation, we have quickly adapted our factory at Interflex to be able to make much-needed PPE. This ensures we are keeping some elements of production going as well as contributing in a small way to help those on the frontline.
Plan for the best and the worst
Of course, this time we are facing an unprecedented problem with questions that we can't yet know the answer to. Will we have a recession after the return to work or could the money that government is providing for support such as paying 80% of furloughed staff wages bring about a boom in our economy? This means that you need to have a plan for the worst-case scenario - and also the best. Admittedly, this is tricky: a recession will shrink your business while a boom will grow it. Having a quieter time offers the chance to take a fresh look at your business, identifying opportunities, new markets or different ways of doing things.
Cashflow is king
If one of the advantages of a crisis is the fact that it forces us to take a fresh look at our businesses, one of the greatest challenges is cashflow. It's important at all times to ensure that you have all the information you need to provide a full and balanced picture of the company's position including orders, financial information and projections. But this becomes even more crucial during a crisis. Build a good cashflow plan, spend time analysing it then break it! After that, work on how you can plug the gap. Ideally, you should have robust quarterly cashflows updated and investigated weekly with forward planning over a two or three year period to provide a clear vision of any potential problems. Of course, very few could have predicted our current situation, but having realistic cashflow plans in place helps you deal with the unexpected.
Look for help when it's needed
It's also important to recognise that you may not have all the answers and that at times it's appropriate to seek support. The government has provided some generous packages which will help many companies, although it will not be enough to ensure everyone's survival. However, there are many other organisations offering support and advice. Between 2008 and 2012, I sought support from some great organisations and schemes such as the Goldman Sachs 10,000 Small Businesses programme and the GrowthAccelerator scheme which was a government backed initiative. Many of these organisations offer free support and can be invaluable. I still work with as many as I can. For example, I'm spending some time at the moment following key organisations in our industry such as the Society of Motor manufacturers and traders (SMMT) as well as taking part in a range of relevant webinars - many of them free. There's no excuse for failing to keep your knowledge up to date and relevant at any time - and now more than ever, connections, knowledge and inspiration are important.
Keep in touch
I'd also advise continuing to communicate with customers and your target markets. By doing this, we have been in a position to hold sales meetings via online platforms and keep our sales pipeline open - which means as soon as we re-open, we will have orders to fulfil. Ultimately, in recession it's crucial to keep marketing so your customers know you are still there for them, ready to solve their problems and provide the products or services they need now or whenever they are able to order again.
It's also a great time to take a fresh look at your website and how well it is (or isn't) working for you, to explore new channels of connecting with your target market and to identify where new customers and sales leads come from. Ramp up your social media presence and PR activity - anything to get the message out that you are still open for orders and you are ready to go as soon as things re-open - as they will. The message is: ‘We're still here and ready for your business'.
No one knows what the economy will look like in three months' time, six months or a year. We can't even be sure what the world will look like. This is a challenge that is in some ways unlike any other that has come before. But if we keep our heads and apply principles of great leadership and good practice, we can lead our businesses through this crisis.
Jim Griffin is Managing Director of automotive parts manufacturer Interflex and has over three decades of experience working in the automotive insulation industry
