By: Alan Scharfstein, President & Sheon Karol, Managing Director, The DAK Group

We are living in a period of uncertainty, anxiety and loss of control. The last few weeks have seen unprecedented deterioration of wealth in the public markets. As investment bankers to the middle market, we anticipate that this period will be followed soon by a new, unprecedented time, a period of Economic Reckoning which will change the direction of many companies and the economic fate of their owners. 

However, to preserve value, business owners must use prudent and swift strategies that will protect and enhance their company. By understanding the nature and implications of this Economic Reckoning there are direct and actionable steps that you, as a business owner, can take. These actions will determine:
​

• Which companies will prosper, and which will merely survive?
• Which once-profitable companies will not be able to overcome their economic challenges and will wither away?
• Which strategies and tactics can protect and enhance the value of your business?

​Success or failure will depend on the willingness and ability of a business owner to adapt quickly to the new reality – business as usual is not an acceptable plan. Risk is opportunity: companies that take the necessary steps will not only survive but also prosper. Winners will gain new markets and greater market share as weaker companies fail or are acquired. 

What are the tangible, actionable steps that business owners can take to preserve and enhance the long-term value of their businesses?

Liquidity Management

Cash is the lifeblood needed to endure the Economic Reckoning – many successful companies have stumbled by not having sufficient cash to survive short-term cash flow needs. 
Identify your core business. Focus on segments that generate positive cash flow and direct resources to strengthen this part of the business, while preserving valuable assets for the future. Implement cost reduction initiatives and minimize non-essential variable expenses. Manage costs vigorously during this time of crisis. Reductions in workforce should be made swiftly and as deep as possible – this preserves cash and reduces workforce anxiety regarding further cuts.  Governmental programs to cover payroll should be accessed to the extent needed to retain go-forward employees. Divest non-core operations and sell non-core assets to generate cash. Direct investments consistent with the company’s strategic focus. To the extent possible, draw down on lines of credit to increase cash reserves.

Financial Forecasting

Companies must stress-test financials for all potential downside scenarios. Scenario modeling should reflect customer demand, workforce resources and supply availability. We strongly recommend creating a cash flow model. Although reliable accuracy is difficult to achieve, it is an absolute necessity during the Economic Reckoning. This type of forecasting will also allow you to better negotiate and receive more favorable terms from banks and other financing sources. We are available to work hand in hand with you  to prepare a model that you can operate independently and roll forward.

Business Continuity Planning

Identify key employees who have the capability of moving your business forward. Those who helped make you successful in the past may or may not have the vision to plot your future. Solicit input and buy-in from team members and other key employees. Anticipate and plan for operational disruption for at least the next 6-9 months. Assess and protect your chain of business operations, focusing on the supply chain, cash collection and cash outflows, specifically AP and AR. Identify key advisors on whom you can rely to help you make the right decisions during this trying time.

Leadership

Crisis demands leadership. Leaders must be willing to adapt and think creatively to protect the business in the short-term and position it for success in the long-term. Leaders must project confidence, provide vision, establish teams, encourage collaboration, provide transparency and exhibit empathy. Above all, leaders must take early and decisive action to implement change.

Communication

Regular, transparent and visionary communication is vital. If you control the message, you can facilitate the adoption of the new strategy. Engage with all constituencies, including customers, clients, lenders, stockholders and employees – to emerge successfully from the Economic Reckoning you need the support of all these constituencies.

Employee Relations and Welfare

Move decisively to determine the go-forward team. Take all possible measures to protect and motivate the critical employees. Utilize outside resources, hold regular (virtual) meetings, solicit employee input, maintain personal contact with key reports and provide constant, transparent communication that both updates employees and conveys the company’s vision.

Customer and Supplier Relationship Realignment

Reevaluate customer and supplier relationships to focus on the core business and protect cash flow. Renegotiate contracts to reflect the new reality and strategy of the company. Many suppliers will show additional flexibility at a time like this. Landlords do not want empty buildings; suppliers want to keep their plants busy. Don’t be afraid to ask for concessions as part of your long-term relationship. Monitor the financial health of customers and suppliers.

Optimize Capital Structure

In the Economic Reckoning, the cash needs of your company will change. Debt should be restructured to align with your new strategy, cash constraints and downside risk. Business owners may need to adjust their equity position to achieve these goals. Carefully manage lender relationships and negotiations in loan arrangements. Weigh with caution whether you want to increase personal risk such as personal guaranties. Communicate with your banks and financing sources. No one likes surprises. Present your requests as part of a plan that is well thought out and supports your requirements.

Outside Resources

Take advantage of outside resources. These include government stimulus plans, SBA / SBI loans and tax deferments. These measures are short-term solutions that can help provide a buffer while implementing the company’s new strategy. We caution that relying too heavily on outside resources is short-sighted and may mask problems that can be detrimental in the long-term. A combination of outside resources coupled with internal operational changes positions companies for long-term success.

Danger is Opportunity

Early and decisive action will be rewarded in the short- to medium-term and preserve value in the long-term. Consider new vendor and customer strategies, alliances with vertical and horizontal partners and acquisition of weaker competitors. Survivors of the Economic Reckoning will have opportunities to grab market share and re-imagine their business strategies.

We know that many middle market business owners are trying to understand whether the last month represents a loss of value that took many years of effort and sacrifice to achieve. Do not despair but do not delay – take the necessary steps to adapt and you can emerge from the Economic Reckoning both as a survivor and well placed to take advantage of the opportunities that will certainly be available. 

Entrepreneurs will survive and prosper, by deploying both intelligence and ability. DAK stands ready to assist you in your efforts. We will summon every bit of our expertise and knowledge to guide you. The economic landscape is changing by the hour.

What will remain constant in these uncertain times is our commitment to you. We are available to you, and if we can be of any assistance please feel free to reach out any time. 

Stay safe.

By Steve Adubato, PhD

​Like everyone else in the COVID-19 nightmare we are living, I am deeply concerned, feeling anxious, and worried about my family and those closest to me and not sure how to manage and deal with this terrible pandemic and everything connected to it. I have been teaching, coaching, writing about and most of all thinking about leadership and communication for a solid two decades. I have written 5 books on these subjects, and I can fill another book with everything I either don’t know or am uncertain about in terms of how best to lead and communicate in really difficult, challenging and uncertain times. That’s why I wanted to write this column.

The one thing I have come to understand is that whether it is COVID-19 or any other “crisis” that shakes us to our core—one of the most important things we can do is be useful and helpful to others. It’s not that the greatest leaders aren’t scared. They are. It is that they don’t let that fear and anxiety paralyze them.

It seems to me that the most effective leaders are the ones who understand and acknowledge their anxiety and insecurities in the midst of a crisis like this—but also know that they have a larger responsibility to the people they serve. The best leaders in a serious crisis need to be a better version of themselves and reach deep inside to do the kinds of things that give others direction, a sense of hope and, most of all, create a level of trust—because that is at the core of leadership and how we communicate. With this in mind, consider the following:

--When communicating in any public forum, leaders must be truthful and candid. This is easier said than done, because many leaders, in the effort to give people “hope”, sugar coat how serious things really are or make statements that can’t be backed up by facts, science or reality. Giving false hope and communicating misinformation is one of the worst things any leader can do in a crisis or pandemic like we are currently facing.

--Be concise. Don’t drone on. Don’t pontificate. I like to say “stay within the goalposts” when
communicating. That means, identify what key points and messages a leader needs to communicate and put them “inside the goalposts”. Everything outside that goalposts is dangerous and risky. So what is outside the goalposts? Blaming others. Pointing fingers. Name calling. Making statements you can’t back up. And, frankly, letting your emotions and fear get the best of you. The greatest leaders in a crisis are disciplined and practice self-control, because when a leader communicates that he or she is “out of control”, what impact do you think it has on everyone else?

--The greatest leaders step aside and let others who are more knowledgeable in a particular subject area step up and speak out. The best leaders are not the ones who “talk the most” in a public forum or press conference. It seems to me NY Governor Andrew Cuomo and NJ Governor Phil Murphy get this part right. Yes, they are talking a lot, but they are also deferring and “handing the ball off” to other experts (Particularly about public health.) who can speak with authority and experience on a particular topic. After 9/11, it struck me that then NY City Mayor Rudy Giuliani did this. Great leaders are “facilitators” in public settings, allowing others to fill in the blanks and respond to difficult and specific questions. They are not the people who are supposed to know the most…about everything.

--The best leaders are also the ones who when they do say something that is either incorrect or needs clarification, has the self-confidence and level of maturity to allow a subject area expert to correct or clarify something that is said in public—without any retribution or negative consequences.

--Leaders should never lose their cool. When asked a difficult or challenging question by a reporter or key stakeholder in a public forum, there is no excuse for a leader to attack the questioner. The best leaders understand that attacking the questioner as well as the question itself actually communicates a lack of confidence, because the leader clearly doesn’t want to and can’t answer the question. If the answer is “I don’t know,” or, “We should have handled that better,” just say so. It doesn’t help anyone to express anger or personal animus toward someone simply asking a tough question. Leaders are supposed to respond with confidence, clarity and a sense of “I’ve got this”, as opposed to “how dare you ask me that question in public”, particularly when the question relates to the crisis at hand.

--Great leaders acknowledge and empathize with the pain and struggle people are experiencing in a public health crisis. Simply stating “here are the rules—obey them”, won’t get things done. The best leaders understand that social distancing and “staying in your house” is unnatural, not easy and incredibly difficult for parents to explain not just to themselves, but to teenagers and children. I appreciate and respect leaders who acknowledge that and say so publicly. So, on one hand, leaders should communicate accurate facts, statistics and information as well as “the rules” we must abide by, but if that is all a leader does in public, why not just send a mass e-mail?

--The best leaders communicate in a human and compassionate fashion. In the case of the COVID-19, they get that beyond the numbers of those infected and worse, those who have died, that those numbers represent real people and families. I’m not saying that being a great leader and communicator in a horrific pandemic is easy, it’s not. Trust me, I struggle every day with it, and I only run a small production company as well as teach, coach and write about these topics. However, I have been spending a lot of time reading about presidential leadership in war time in an effort to put things in perspective. And whether it is Lincoln, Roosevelt or LBJ, it is clear that they had their doubts and fears, but the greatest leaders have one common and consistent trait, which is that they manage and deal with these inner fears and demons because they understand that their greatest responsibility is to help others get
through the most challenging of times.

--Stay connected with your team and key stakeholders. Whether it is your employees, board of trustees, community or other people in your orbit, the best leaders create opportunities to connect with their team and to be present, if not in person, then remotely. Technology offers a great opportunity to remain connected and in touch with others who are undoubtedly worried about their family, career, friends, 401K and health. Remaining connected with your key stakeholders with regular and consistent updates, as well as asking what they may want or need, is critically important for every leader. These open lines of communication reinforce trust and help ease some of the anxiety and fear they may feel during these very uncertain and scary times.

​As always, e-mail your feedback to [email protected]. On behalf of my colleague Mary Gamba and everyone on the Lessons in Leadership team: STAY SAFE. STAY HOME. BE WELL.

By: John W. Kennedy, Ph.D., Chief Executive Officer, New Jersey Manufacturing Extension Program, Inc.

​I’ve been in MFG & Engineering for many years and have watched as our efforts were always downplayed. In fact, I took that reality and wore it as a ‘Badge of Honor’ like so many others….and where did that get me…us?
 
It allowed our critical Industry Sectors to be forgotten and disrespected. 
 
The fact is that over my own career I’ve seen many ‘crossroads’ – 9-11, natural disasters, price & tariff wars, and now a pandemic – the initial ‘talk’ is always the same…
 
Bring Back US Manufacturing!!!
 
Then the urgency recedes, and we go back to business as usual. How’s that working now? Does anyone foresee much changing at all – moving forward?!? Oh sure…we’ll convene Task Forces made up of a variety of Governmental and Academic Experts with a few major corporations thrown in to provide a better visual…then what? (Cue the tumbleweed…)
 
Let’s look at the facts and then we can make a more intuitive and effective decision:

• MFG has never left the US or New Jersey – we still make many high-end products and we lead the world in Innovation, Productivity & Quality.

 

• NJ has about 11,000 companies and 380,000 employees that ‘make stuff’ – ‘stuff we need’. The Average NJ MFG Firms is made up of a highly-productive 34 well-trained, technical people.

 

• Many Global Pre-COVID-19 MFG indexes had the US overtaking everyone, including the Chinese in 2020. We’ll have to see what the recovery and rebound has in store for us.

 
So, what happened?
 
Well it’s kind of simple…we’ve destroyed our Supply Chain and this has been done over decades…no pointing fingers required as we’ve all been complicit.

• Very few companies make ‘complete machines’ anymore without the support of a very capable and complex Supply Chain. That includes Car, Airline, and Military products. Remove the meat from the hamburger and you’re left with a cheese sandwich.

 

• We don’t create the various types of Steel & Aluminum that we once did. We allowed it to go off-shore and now we can’t always get what we need. Yes, there are multiple types of steel that have different properties and different uses.

 

• Larger entities like Apple, 3M, GM, Big Pharma and many others have found a lower-priced option in places like China, Mexico and other areas of the globe. The cost component is a tenet of good business, but not single sourcing items. This is true especially during a crisis – how’s it been finding…?

 

• N95 & Surgical Masks
• Surgical Gowns
• Ventilators
• Medical & Food Grade Gloves

 
???
 
How about all those medications, like Blood Pressure treatments that are now becoming more difficult to secure? Bad Business…Dangerous Business…Deadly Business.
 
Look, I’m not blaming companies for securing higher profits, but when a country, et al does not plan out a complex process like Manufacturing and allows others to dictate our safety…we all crash. Therefore we all need to focus and gain back the ground lost.
 
So this really is not a missive focused towards anyone, but our MFG/STEM/TLD Sectors – Company Owners & Employees – because if we remain silent and on the sidelines now, then we quickly fall back into the various modes of failure until the next time we all cry to ‘bring back manufacturing’! That will be too late again.
 
How do I know this isn’t happening - yet?

• The NIST-MEP National Network (MEPNN) – the only Federal Program that has an ROI of 9:1 and that focuses on Small to Mid-Sized Manufacturing Firms has been ‘zeroed out’ in the Federal Budget over the past 3 years. ‘We’ then had to fight to get reinstated instead of focusing on our Mission. Thank goodness for the NJ Federal Delegations Support during this time.

 

• By my view the CARES Stimulus package has over $14 billion for various Agricultural needs, but the MEPNN received $50 million and the MFG-USA Institutes another $10 million. NJMEP was able to secure $1.25 million for NJ Firms. For perspective that comes to about $110 per MFG Firm. My point is not to downplay the importance of Farms in our lives, but to show the utter financial discrepancy between these (2) critical Industries in the eyes of our Government…our Citizens.

 

• THE 51 State-Based Centers in the MEPNN are requesting additional funds to be shared amongst the States, but we’ll have to wait to see if that will happen.

 

• A great deal was said about companies like GM, GE, Ford, and Honeywell re-tooling to make Ventilators, and my assumption is that they are being paid. To be honest – this is a positive – but what about the 500+ companies in NJ alone that have already stepped up to help. Many were chastised for not donating their goods. Others were not provided with the proper specifications and/or waivers from the FDA.

 

• We’re all talking about the heroes – medical personnel, 1st responders, and others – and damn it, we should!! They have stepped up big time, and I appreciate their sacrifices. Just like I appreciate those made by the Essential Manufacturers that have been quietly going to work and making the items that Protect Us / Medicate Us / Feed Us…every day as well.

 
I remain hopeful that the gains that New Jersey (Governor, MFG Caucus, NJDOL, NJBAC, NJEDA) has taken over the past few years of investing in Manufacturing & STEM will not be lost in this recovery. Programs that support Tax & Red Tape Relief, Training, Apprenticeships, and yes, NJMEP are critical to our recovery.
 
The bottom-line here is clear…US & NJ Manufacturing does not want a bail-out, but an investment and the respect that it deserves. However, if our Industry chooses to sit back and watch things play out this time…we will all lose out. Our silence is not golden, or something to be proud of, but foolish. If we do not stand up and speak up for ourselves, then we deserve the negative outcome.
 
Your choice.

By: TetherView
We say the following without irony: prevention is always better than a cure.

This saying can be applied for almost all facets of life, when the discussion is about being proactive or having to react to an event. Given the events of the day, we understand that preparing for the realities of COVID-19 were next to impossible. However, we at TethterView, believe that today’s reaction can be tomorrow’s preventative measure.
This is why we continue to tout VDI as the best solution, not only for business continuity and cyber security, but also for mobility.

Consider this: in a traditional setup, the desktop environment resides on one physical computer, regardless of whether it is a desktop or a laptop. Outside of that one computer, that specific user’s environment is largely inaccessible. So, if that computer fails, they can’t access their desktop environment. This was one of the biggest hurdles companies’ had to solve for during this pandemic. Their need resulted in overworked IT teams setting up hundreds of laptops, so employees could access files—or worse yet, enabling teams to access files on unsecured home networks with relatively uncomplicated passwords.

With a virtual desktop, the desktop environment is stored on a server and accessed through a specific application or compatible web browser over the internet. Once an employee logs into the virtual desktop system, they can view and interact with their desktop environment. All their programs, folders, and even their wallpaper are available through the remote server.

Additionally, by utilizing a VDI, users are accessing the platform through a secure encrypted tunnel. For example, our VDI deployments provide an extra security layer by giving end-users access to the user interface only. We do not grant anyone outside of the TetherView team access to the management console itself, unless requested and authorized by the organization. Moreover, every action is tracked through a management interface, which is perfect for any compliance requirement. Similarly, end-users can only access their virtualized environment. This gives admins the peace of mind, that the virtual desktop environment will stay safe even if an individual user’s experience is compromised. Finally, admins can segment or partition data from users, ensuring each user ONLY has access to files or folders relevant to their specific function or position.

​The human body cannot function without the heart pumping blood. The IT infrastructure that supports a business is like a heart in a human. The services should always be operational, or the business would cease to operate. When you pair virtual desktops with a cloud computing environment, you can rest assured that your applications, data, and files are always accessible, no matter which device your employee chooses to use. Plus, everything is securely stored on remote servers, preserving your critical information even if a computer fails.

By: Cathy Coloff, Managing Member, IT Radix

​The world is slowing down during this COVID-19 pandemic.  Wall Street is being hit hard.  People are no longer going out.  We’re told to quarantine or self-isolate and not engage in groups.

You can bet there’s one group that’s not slowing down at all.  In fact, they’re probably working overtime while the rest of us have our lives turned upside down.  Cybercriminals and hackers know there’s no better time to strike than during a global crisis.  While you are distracted and spending your time trying to make sense of this new normal, they are finding new ways into your IT network so they can steal data and passwords, compromise your clients’ private information and even demand large ransoms.

Cybercrime is already on the rise and is expected to cause $6 TRILLION in damages by 2021!  But, if history repeats itself, hackers will be out in full force throughout this Coronavirus scare.  We fully expect in the upcoming weeks that headlines will change from stories about COVID-19 to accounts of a frenzy of cyberattacks on corporations and small businesses.

Here are solutions you can implement now to help protect your business data, money and productivity:

1. Be more suspicious of incoming emails.
Because people are scared and confused right now, it’s the perfect time for hackers to send emails with dangerous malware and viruses.  At this moment, your in-box is probably filled with “COVID-19” subject lines and Coronavirus-focused emails.  Always carefully inspect the email and make sure you know the sender.  There’s a cdc-gov email address out there now that’s not legitimate and is spamming in-boxes across the country.

Avoid clicking links in the email unless it’s clear where they go.  And you should never download an attachment unless you know who sent it and what it is.  Communicate these safeguards to everyone on your team, especially if they are working from home.

2. Ensure your work-from-home computers are secure.
Another reason we expect a rise in cyberattacks during this pandemic is the dramatic increase in employees working from home.  Far too many employers won’t think about security as their team starts working at the kitchen table.  That’s a dangerous precedent.
First, make sure your employees are not using their home computers or devices when working.  Second, ensure your work-at-home computers have a firewall that’s turned on.  Finally, your network and data are not truly secure unless your employees utilize a VPN (Virtual Private Network).  If you need help in arranging your new work-from-home environment, we would be happy to get your entire team set up.

3. Improve your password strategy.
During crises like the one we are all facing right now, your passwords could mean the difference between spending your time relearning how to grow your business and trying to recoup finances and private data that’s been hacked.  Make a point now to reevaluate your passwords and direct your team to create stronger passwords.

Also, while it’s so convenient to save your passwords in your web browser, it also lessens your security.  Because web browsers simply require their own password or PIN to access saved passwords, a skilled hacker can bypass this hurdle.  Once they access your saved passwords, they can steal as much as they want – credit card information, customers’ private data and more!

Instead, you should consider a password manager to keep all of your passwords in one place.  These password managers feature robust security.  Ask us about our Password Management solution.

You, your team and your family have enough to concern yourselves with in regards to staying healthy, living a more isolated lifestyle and keeping your business strong.  There’s no need to invite in more problems by letting your computer and network security slide during these times.

If you need additional security advice or would like to have a consultation to discuss how to keep your data safe, simply contact IT Radix here or by calling (973)298-6908 to connect with them today.