Business Operations

By Mike Leigh

Executive Summary:

The pandemic forced many organizations to take swift and drastic action to stay in business, and to consider how resilient they are in the face of adversity.

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Stay in the game - resiliency

In every organization there is risk, but in my experience, there are few companies that do a good job of comprehending and evaluating their risks, and then subsequently planning how to remain resilient if those risks occur. Insurance is a valuable tool to mitigate many risks, but it doesn’t cover everything. Consider some of the risks that most businesses face.

Labor – I recently attended a CEO conference where I learned that the USA could experience a labor shortage for the next 10 years based on demographic trends. Is your business prepared for extended labor shortages? How would you handle the loss of a key employee?

Business Strategy – As we’ve learned from the pandemic, the market for goods and services can change very fast. How nimble is your business? Successful businesses in the future will be able to quickly adjust their business strategy to adapt to rapidly changing market conditions.

Financial – Nothing brings a quicker end to a company than negative cash flow. How resilient is your revenue stream? What would happen if you lost your top one or two customers? Diversity in your client base is important. Having a bank line of credit as insurance to short-term cash flow challenges is another tool to help stay solvent.

Energy/IT – Due to an aging power grid, more severe weather, and the retirement of carbon-based power plants occurring faster than new renewable sources, the frequency and severity of power outages is likely to worsen in the future. Additionally, IT systems continue to be vulnerable to cybersecurity threats. What would be the impact to your business from extended power or IT outages?

Supply Chain – The pandemic demonstrated the risks associated with overseas supply chains. But domestic suppliers can also fail. What would be the impact of having your most important supplier suddenly fail?

The top priority for every business should be to stay in business. These risks are real and potentially devastating, but all of them can be handled with prior planning. Leadership teams can identify their biggest risks and run “what-if” scenarios, then take proactive measures depending on the severity and likelihood of occurrence.

Identify your risks. Develop a mitigation plan. Stay in the game.