This is the fourth edition of my “New Regular” series, focusing on the post-pandemic marketplace. “Normal” curled up in a whimpering, fetal position four months ago.
At last, we’re squeezing through this coronavirus shutdown wormhole as, state-by-state, Americans break out of coronavirus hell to pursue our lives and work.
For many business owners, unlocking their doors to customers for the first time in weeks will feel like a bear digging out of hibernation into a world reset. Emerging into the sunlight, they’re anxious to find familiar – anything that looks like what they left.
But take heart in this: some things haven’t and won’t change. Just as your computer has default settings, so does operating a business in the marketplace. I’m talking about rebooting and resetting to the fundamentals. They are your business’s operating True North.
While sorting out what part of “Old School” you should shed (like running a business that isn’t mobile-ready), and “New School” trends to adopt (like doing more remote business), remember this about fundamentals: they’re neither Old School nor New School. They are THE School. And in THE School, all other fundamentals, forces, and factors are subsets of three Prime Fundamentals which are as immutable post-pandemic 2020 as they were a year or a century ago.
Volumes have been written about these fundamentals, but we’re going to look at them in terms of getting your business reset in the New Regular, post-pandemic reality. Now, as we emerge from our pandemic dens, let’s reboot to what everything in business defaults to the Prime Fundamentals: Customers, Cash, and Profit, in that order of priority.
When you summit Mount Marketplace and ask the Oracle of Ownership, “Oh, Great One. Where do I find truth?” she will say: “Customers.”
Then, in response to your befuddled face, the Oracle will hit you with this razor, “Ask them what they want.”
Whatever you’re supposed to be doing or selling today, tomorrow or next January is in the heads of customers – right now. When you ask customers what they expect from your business and then deliver that, your chances of surviving into next year will greatly increase. If you don’t, you’ll become irrelevant, which means: “Out of business.”
Since no one living has been though a pandemic-driven economic shutdown before, be prepared to reset what you once knew about customer expectations. Ask specific questions of specific customers. Post-pandemic customer expectations and behaviors will be anywhere between somewhat different to unrecognizable from what you knew last January.
Here’s the dividend of the Oracle’s wisdom: When you get the Customer Prime Fundamental right, it pays a double.
Contact – communicate – ask questions. Rinse and repeat. Today. Now.
Clearly the original operating fundamental is cash management. For millennia, cash was King; post-pandemic, it’s the Emperor.
Once, I would have bragged on you for being an executive delegator. But today, and for the foreseeable future, you cannot delegate cash management. You must treat it like it’s the most precious thing inside the four walls of your business.
Everything your business does – every twitch – must follow these two post-pandemic non-negotiables: 1) If you spend a nickel on Monday in support of sales, you need it back on Friday – this Friday; 2) when cash is used for expenses, it has to be for what you must have, not what you want. Only customers get what they want. For the foreseeable future, your business gets only what it needs.
One of my mentors gave me the best cash advice 35 years ago, and it’s even more relevant in the New Regular: “Look after the pennies and the dollars will take care of themselves.”
If cash is the oxygen of your business, profit is nourishment, making your business strong, resilient, and sustainable. But for the rest of 2020, focusing more on the middle line – gross profit – than the bottom line is the high-percentage play.
You can survive into 2021 if you don’t produce net profit between now and December 31. But if you don’t generate enough gross profit to cover your operating nut, well, you likely will not open your doors next January 1.
Gross profit begins with pricing. You can’t price products successfully until you know your gross profit margin (percentage). And if you don’t know your gross profit number, you also don’t know that you’re already out of business.
Feeling vulnerable and anxious to get sales coming in produces the understandable temptation to discount. But that’s stealing from gross margin, which is stealing from yourself.
In the next 12 months, there will be three great Prime Fundamental tests of your skills: 1) Can you manage against gross profit? 2) Do you have the courage to set post-pandemic pricing that delivers that number and the cash you need? 3) Can you sell your post-pandemic value proposition so it converts your price into value that customers can’t live without?
Finally, here is the essence of The Prime Fundamentals in one sentence: The more you love-up your customers by meeting their New Regular value expectations, the more gross profit you produce, and the more cash you have to manage.
And remember, getting the customer fundamental right pays double.
Write this on a rock … Reboot to THE School Prime Fundamentals and customers will come and play in your backyard as if no one ever heard of coronavirus.