Last week, the Office for National Statistics (ONS) released frightening data on the state of the UK economy. It reported the UK GDP fell by a record 20.4% in April due to the impact of lockdown.
The result of this? Britain is about to be plunged into recession. Unemployment is expected to more than double, spending will be curtailed and businesses will close.
With Brexit talks struggling to get back on track and the threat of a second wave of coronavirus hanging in the air, the future of the UK economy is uncertain.
To survive, businesses shouldn’t try to predict the future. Instead, they should up their game by accepting uncertainty and making detailed plans that take into account a range of future possibilities.
In this article, we’re going to take a look at one of the greatest sports managers of all time and ask what business leaders can learn from his approach and how it may help them to navigate the pandemic recession.
A Philosophy to Win
Bill Belichick is widely regarded as the greatest American football coach of all time, having won six Super Bowls as head coach of the New England Patriots.
However, Belichick isn’t just renowned for his incredible success on the pitch – he’s also known for sharing the philosophy behind his coaching style.
These nuggets of wisdom work because of their universal application. They don’t just relate to sports – they’re a recipe for success in many walks of life.
They centre around the mantra of “do your job”. The main elements of this are: being prepared, working hard, paying attention to detail, and putting the team above individual desire.
Two of these lessons are especially pertinent right now: preparation and attention to detail. Let’s take a look at these:
Belichick’s team always has a plan for success. Everyone knows the plan and their role in it – this is the backbone of “do your job”. When his players are getting swept up in the intensity and emotion of an important game, he asks them to refocus on exactly what they need to do as individuals and ignore the externalities.
You also need to switch off external noise – the millions of articles predicting economic outcomes are speculation – accept there is a wide range of possibilities and prepare for them all, including positive scenarios.
Attention to Detail
Belichick obsesses over detail and looking for solutions to win every game, leaving nothing to chance. He’s notoriously hard on his coaches, urging them to have an answer to every problem.
Belichick knows that the insights and edge required to win games comes from rigorous analysis and hard physical conditioning. His star player, quarterback Tom Brady, is obsessive about his game and spends hours and hours watching previous games to understand the opposition. He combines this with demanding physical drills and a team of physios and nutritionists – anything to give him the edge.
This isn’t just about putting the hours in: it’s also about doing deep analysis of your business, industry and customers. You may need to ask some difficult questions – don’t be afraid to find new ways of working and challenging conventional ways of thinking. The world is changing, and your business may need to as well.
Preparation and Attention to Detail During a Pandemic
The most relevant part of Belichick’s philosophy for businesses operating in a pandemic is the in-depth analysis of the game which he uses to judge risk. His preparation and hard work are not just about mitigating risks posed by the opposition, but also the weaknesses in his own team.
As business leaders, we need to be analysing the financial health of our clients and supply chain to identify where weak links could cause an issue.
These could include:
Companies that suffer an unpaid invoice are three times more likely to fail within twelve months than those that have not. Be wary of debts that are a significant proportion of a company’s net worth – usually less than 10% of these debts are ever recovered.
A large number of CCJs indicate that a company has poor customer service or weak processes. An increase in the number of CCJs – either gradual or rapid – can be a sign of problems at the company.
Assets That Are Difficult to Value
Watch out for companies that have balance sheets with large amounts of assets that can’t be easily valued. These may be worth very little should the company collapse and leave you out of pocket. Also, be wary of businesses with lots of intangible assets – these are mostly worthless in the event of a liquidation.
Changes to Accounting Period
If a company has changed its accounting period it’s worth taking a closer look at them. The reasons behind this could be legitimate; however, they could also be attempting to hide poor financial performance or push back corporate tax payments – a common tactic of struggling companies.
Fixed charges mean that in the event of liquidation, the business owners are paid back the value of assets before its creditors are. This may give them less incentive to keep the business afloat; companies where the owners have a fixed charge over assets are 2.8 times more likely to fail than those that don’t.
Take Your Risk Management to the Next Level
You can take your risk management to the next level with Red Flag Alert. Our software provides company health ratings that are highly specific to each business. Billions of data points have been collated and these vast datasets power algorithms that result in accurate predictions on business failures.
- Risk management: Make informed decisions on the financial risk of each customer.
- Real-time monitoring: Know instantly if your customer’s risk profile changes.
- Efficient onboarding: Ensure your onboarding process is smooth, fast and manages risk effectively.
- Accurate credit limit decisions: Set appropriate credit limits to minimise risk exposure.
- Clean and effective CRM: Our API updates your CRM in real time.
To talk to one of our team about how Red Flag Alert can protect your business from risk, get in touch with Richard West at email@example.com or on 0344 412 6699.
Or for more advice on how to survive the coronavirus pandemic, download our newly released Playbook here.