In periods of extreme turbulence and uncertainty, crisis planning instantly rockets to the top of a cannabis business priority list. Highlighted in ‘Reflections: Thoughts To A Muse’, the steps below are essential to implement immediately as we move through periods of low predictability.
Protect your employees and customers at all times
Work to implement and where practical surpass all available health guidelines while continuing to fine-tune these practices over the course of the crisis period. If possible, maintain a virtual team with a focus on regular internal communication. If that is not possible for your business, enhance deep cleaning and sanitization of your facility, ban visitors, have all non-essential personnel remain home, and equip essential employees with appropriate personal protection equipment. Make hand wipes, masks and sanitizers available at all times, and implement a ‘no questions asked’ sick leave policy with job security. Eliminate all non-essential travel and support remote employees with the tools needed for them to do their jobs.
Increase communication frequency to customers and increase transparency on internal practices taken to ensure product and operational safety. Remain transparent with those around you – transparency leads to increase openness, which in turns creates trust and contributes to a productive culture.
Once you have put these practices in place, look outward to protect your community. Review and where appropriate enhance your corporate social responsibility initiatives. If you are able to manufacture essential goods or provide essential services, consider shifting resources to increase output in each.
Implement extreme cost controls immediately
Optimize the supply chain of your cannabis business by increasing automation and reducing supplier and customer concentration. Move toward zero-based budgeting with variable costs wherever possible. Address variable expenses, extend payment terms, freeze hiring and non-essential travel. Manage your liquidity and balance sheet with diligent focus. Move toward automation and a more variable cost structure to make your business more resilient to environmental volatility.
Stress test your P&L and liquidity with worst-case assumptions
Look at how your cannabis business' financial model will perform under the three scenarios below. Hope for the best, prepare for the worst. Remember that hope makes for poor strategy: ·
Preparation for each scenario stretches across the areas of revenue defense, operational stability and cost control. ·
Stabilize operations to adjust to the new normal; assume it is here to stay
Connect with key suppliers to understand supply risks they may be facing and establish a joint process to monitor potential disruptions. Adjust manufacturing to meet updated market needs, establish contingency and continuity plans for core needs and revisit inventory levels with a focus on minimizing disruption from supply shocks. Reduce and defer non-essential tasks to free up labor; plan for additional labor shortages and reduced customer traffic. Ensure continuity plans are in place for all HQ functions and establish daily communication with all teams to remain updated on developing risks. Establish a daily dashboard to monitor business vitals and develop predictive diagnostics. Don’t plan for disruptions to end on your timeline.
Eliminate non-core assets and divert resources to pockets of growth
Determine what is core to your business and eliminate the rest. Focus your limited and potentially shrinking resources on core areas that have a chance of growing through or out of the disruption. Imagination and innovation may be necessary for some businesses, while adaptation and adoption of new technology sufficient for others. Review your competitive advantages and make determined investments to help you outperform. Focus on establishing a sustainable cost advantage while ensuring balance sheet resilience over an extended timeline.
Plan for a seismic shift in customer behavior; avoid inaction
Disruption causes behavior change; extended disruption leads to habit formation. Not all habits will return to the way things were, and a ‘new normal’ develops. Identifying macro trends and listening to industry signals will help you prognosticate the post-disruption environment for your cannabis business. Where possible, invest in the team, tools, and technology that will protect your business over time.
Avoid inaction; plan time with your team to reflect on learning lessons and build business resilience to future shocks. If you don’t make things happen, you will watch things happen. Decide whether you are a participant or a spectator.
Communicate with fervor, frequency and healthy fanaticism
Communication is the process of exchanging information, ideas, thoughts, feeling and emotions through speech, writing and behavior. Communication helps us build and enhance healthy relationships, and when communication is limited to screens, speakers and mailboxes it merits increased attention. Communicate with your employees to let them know measures the company is taking as well as resources available to them. Communicate with your suppliers to understand their safety measures, impending supply disruptions and potential alternatives. Communicate with your customers to check in on them, reassure them of product quality and consistency, and offer assistance with discounts and credits. Communicate with your community to let them know that they can be confident in your supply chain and your product quality and consistency. Communicate with your shareholders to check in on them and to let them know what crisis management steps your business is taking. Communicate with the world to share how your business will give back. Communicate with empathy, passion, purpose and frequency. Your environment will appreciate it.
It is futile to worry about that which is out of your control; accepting that frees up essential focus for the task at hand. There is much work to be done within each of the categories above, and we remain prepared to help our community with the tools at our disposal.