Survive To Thrive
Navigating The Challenges Of The Coronavirus CrisisDavid Chute w/ the collaboration of The Members Of The Path To Prosperity Task Force
Survive To Thrive: David Chute, ThinOptics 1
When The World Changes, Those Who Adapt Have A Better Chance Of Surviving
Adaptation Requires1. Understand what is happening, including….2. How long it will last3. How best to navigate the new normal4. How to emerge intact, able to thrive on the other side
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This Is A Siege; It Is Not A Battle• This is not a 1 or 2 month battle with a fast
return to normal; this is a siege of a walled city.
• The enemy will eventually depart; but we must survive long enough to thrive.
• Demand and ‘normal’ patient and consumer behavior will not return until there is a vaccine; strong anti-virals or herd immunity and that is likely to be 12 – 18 months away.
• The impact on the economy will also impact people’s ability and willingness to buy eyecare and eyewear.
• There will be phases as we evolve from shut down to normal.
• Understanding, recognizing and adapting to each phase will be critical to manage as we travel the path to prosperity from survive to thrive.
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Phases And ConsequencesPhase Lockdown
Relaxed Restrictions w/o Managed Transmission
Relaxed Lockdown and Managed Transmission
Managed Transmission With Therapeutics
Recovery
DefinitionGovernmental authorities
prevent anything but emergency exams and eyecare
Government allows ECP offices to be open
Offices open and local market is managing transmission through
testing, contact tracing, quarantine infected
Offices open, transmission managed, and effective drug therapies widely available to
reduce fatality rates and symptoms
Offices open, vaccines (or herd immunity) widely deployed to
slow transmission,and in combination with therapies
reduce fatality rates and symptoms
Patient and Consumer Sales
Almost none; emergency eyecare and on-line commerce
Minimal to low sales; emergency and very needed exams and
eyecare; needed product purchasing; demand limited by
consumer safety concerns; lower incomes and higher
unemployment; More demand in less effected areas
Low to medium sales; exams as needed and when poor vision aggravating; needed product
purchasing; demand still impacted by consumer safety concerns; lower incomes and higher unemployment; More demand in less effected areas
Medium to near normal sales; most exams performed although
many still deferred; demand impacted by safety concerns and economic impact; More demand
in less effected areas
Near normal sales; could be less demand if economic impacts
linger or consumers purchasing more on-line; could be more
demand if deferred exams and purchases are spread across
fewer ECP locations or ECP has improved their business.
ECP Eyecare and Eyewear Supply
Shutdown to minimal emergency availability and on-
line sales
Social distancing at work: spacing out refractions and
eyecare; selling and dispensing; minimizing transmission;
Pivoting to online
Social distancing at work: spacing out refractions and
eyecare; selling and dispensing; minimizing transmission;
Pivoting to online and expanding on-line efforts
Social distancing at work but more relaxed procedures;
Pivoting to online and expanding on-line efforts
Generally normal patient and customer journeys with residual
safety measures in place; expansion of best business
practices
Cash Management
Significant cash loss; drawing down on savings; may need loans and/or more equity
Potential losses if daily sales not enough to cover fixed costs;
manage expenses; pivot sales; may need loans and/or equity
Potential losses or breakeven if daily sales not enough to cover fixed costs; manage expenses;
pivot sales; may need loans and/or equity
Cash generation should be breakeven or positive; expenses should be managed; sales should be more diversified; may be cash
positive
Cash generation should be positive; expenses should be
optimized; sales should be more diversified; should be cash
positive
Survive To Thrive: David Chute, ThinOptics 4
Know Your Enemy• The enemy is less the coronavirus than the
economic changes it causes
• Until consumers and staff feel comfortable, secure and resume ‘normal’ activity, the demand for refractions, glasses, contacts and suns will be less; and the challenge to providing them will be more
• Exams will be performed and products will be dispensed differently to create a safe environment
• Lower sales that take more time to fulfill will generate less cash. The impact on cash must be understood and managed.
• Staff will need to be led and managed as they negotiate the “new normal”
• Understanding all of this, and making smart, innovative, timely decisions will be critical to surviving, then thriving, as we take the path to prosperity
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I Never Did This Before• Uncertainty brings fear, uncertainty,
doubt and a tendency to freeze up
• No decision is a decision; and not acting is the worst thing to do in a crisis
• The second worst thing is to do the wrong thing
• So, best to get comfortable being uncomfortable, and work the problem
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Climb The Pitch In Front Of You
• One climbs the highest mountain one pitch at a time
• One solves giant, hairy problems by solving a hundred little problems, one at a time
• Climbing a mountain can be overwhelming
• Climbing 20’ pitches one at a time is doable
• The trick is to figure out whatproblem to focus on, in what order, and how to solve each piece
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Cash Is King• If the business runs out of money, it’s
game over• In addition to running the clinic,
dispensary and back office, one also has to focus on generating, using and conserving cash
• There are cash management tools that are simple and complex to help understand the sources and uses of cash, and how long it will last
• Every major decision has to be made in light of how it impacts cash
• Just like you can’t run out of gas before you reach your destination, you can’t run out of cash before the world returns to a newer, better normal
• Understand financeSurvive To Thrive: David Chute, ThinOptics 8
Understand Your Economics• When sales per day falls, the cash
generated from exams and product sales does too
• But fixed costs like rent and salaries tend to be fixed, which means lower sales can lead to loss
• Losses can burn through the cash required to navigate the journey from shutdown to normalcy
• Understand how to manage your income statement and bank account to navigate through this
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Sales, Cash Generation & Breakeven
• Net Sales
• Exams
• Product Sales
• Less: COGs & COSs
• COGs: Product and lab expense
• COSs: Cost of sales = other variable deductions
• Equals: Gross Margin
• Cash contribution to fixed expenses
• Less: Fixed Expenses
• Rent
• Labor
• Utilities
• Other Fixed Operating Expense
• Equals: Earnings Before Interest, Taxes, Depreciation
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$
$ Sales$ 0
$ Loss
Fixed Costs
COGs + COSs
Total Costs
SalesBreakeven Sales:
Sales = Total Costs
Key Point: If Sales don’t generate enough Gross Margin to cover Fixed Expenses, business will lose money; need to increase sales, reduce COGs, reduce fixed expenses.
Cash Is King: Generating, Tracking and Attracting Cash• Businesses can absorb operating losses as long as they
have sufficient cash on hand, or can borrow or attract new capital to continue operating
• The better the business, the lower the losses and the shorter they will be incurred and the more quickly the business can return to generating cash
• Cash on hand is known
• Borrowing capacity will depend on banks and other entities’ (government, vendors, credit cards, friends, family, people’s) willingness and ability to lend
• The better the business, the easier it is to borrow money
• New capital (new equity) will depend on the owners or new investor’s willingness to invest in the business
• The better the business, the easier it is to raise money
• Key Point:• In every case, the better the business, the less likely it will be to
run out of cash and the more likely it will be to attract the cash it needs to operate
• Better businesses have lower break-evens, higher margins, lower overheads, better ability to increase sales or manage expenses
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A Quick Way To Track Months Of Cash On Hand:
Defined As:
Cash On Hand /Monthly Cash Loss
Example: Bank Balance: $60,000
Monthly Cash Loss: -$6,000
Months Of Cash On Hand: $60,000/$6,000
10 Months
Understand Your Customer• Whether it’s a patient in need of a
refraction or a customer in need of a sunglass, patient/consumer behavior is impacted by the world around them, their options, and what you do
• In addition to “regular” eyecare and eyewear, patients & customers will want to feel safe; so their journey will need to be, and feel, safe
• They will also still want to buy goods and services in ways that are fast, efficient, competent, affordable and fun
• When making changes, evaluate your business from the customer’s perspective, not just your own
• This means understanding your business strategy and marketing
• This also means pivoting to new and innovative ways to serve your customer
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Be Intentional In What You Do & How You Do It
• Eyecare is a contact sport, which makes social distancing, refraction and dispensing tricky
• Understand clinic and dispensary protocols by spreading out patients and customers by time and space
• Understand PPE sources and best practices
• Understand how to use your suppliers to help you navigate through this
• Understand how to pivot to greater use of on-line to communicate, dispense, assess eyecare conditions
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Lead
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• There is a difference between Leading and Managing
• Managing is about efficiency, order, process, effectivness
• Leading is about insight, courage, boldness, motivation and inspiration
• We always need good management; now more than ever
• But in uncertain and difficult times, we need great leadership
• As in times of war, there may be sacrifices and setbacks; but great leadership requires hard, bold, smart, inspired decisions to insure victory
