Mark Dickinson, founder of DONE! Hospitality Training Solutions, explains why purposeful planning is a must.
Should we have a risk management plan? The short answer is: yes! Risk management prepares you for events like Covid-19. There are six core elements of risk that a manager can plan for, keeping in mind that the one thing that is certain about a plan is that it never goes quite the way you expect! Regardless, plans give you a framework of careful thinking in a time when you have the capacity to weigh options and create processes. 1. INSURANCE Get the right insurance. Yes, it costs money now, but what about when that event occurs? There is insurance for just about everything. 2. CASH In any crisis situation, cash is king. How much cash do you have on hand? Liquidity allows for plans to be implemented. Set aside: 10 percent of earnings towards savings, 10 percent of earnings towards investment, and 10 percent of earnings towards doing good. 3. LIABILITIES Managing your impending liabilities will determine the timeline of your cash-burn. Preserving cash for life is a key concern, and though liabilities may shout loudly, they are not your navigator to successfully overcoming the crisis. Micro-payments are a brilliant way of ensuring that you are believable and credible. As long as you are paying something, no one can say anything, and if you are making micro-payments, the likelihood is you are doing more than most. Your liabilities will undoubtedly appreciate your efforts. 4. PEOPLE Your company is made up of people, and it is the people that are going to help you keep going. Active risk management for managers is to be constantly aware of the people that they have and make sure that you do not carry people who add low or little value. 5. CUSTOMERS Future income is essential in risk management. Not all income is created equal. Low cost, high return is the Holy Grail. A great risk management plan will have clear-sighted contingencies of the products or services that have the highest returns. Golden oldies — things that produced solidly in the past — are go-to products in crises. Concentrate on talking to your customers, let them know that you are there for them and show them that you care, without trying to sell them anything. 6. SOLIDARITY When you are facing a challenge of the highest ordinance so is everyone else. Create bonds with people around you that are not liabilities. Do not wait for the next crisis to start your risk management plan! Sit down and think about what happened during this crisis and how you were able to weather the storm. Then, having done that, decide how you would have liked to have seen this crisis play out, and prepare accordingly for the next one. Without doubt, there will be another crisis. When, where, what and how, we cannot know, but we can be sure that it is coming, so be prepared.