Colm O’Reilly, the CEO of the Business Post talks about the challenges and opportunities for company and the importance of adhering to its core strategy during the Coronavirus pandemic.
Economic downturns happen periodically and for those that have led a business through a downturn there is a ‘Playbook’ of sorts to work from – conserve cash, slash unnecessary spending, right size the cost base, collect cash from debtors, communicate early with your bank etc.
In some respects this time is no different and CEOs and CFOs will need to quickly dust down their playbooks and re-familiarise themselves with those guidelines. And yet, at the same time, the Covid19 Emergency feels totally different to anything that has gone before.
How many times have you heard the word ‘unprecedented’ being used in the last seven weeks ? Unprecedented times require CEOs to think differently in how to overcome problems, mitigate risks and conduct business in a world with new and still evolving rules of engagement.
The core issue for CEO’s to digest is that Covid19 is a health emergency that for most businesses is manifesting itself as a financial crisis. My concern is that CEOs will overly rely on the playbook and respond to this crisis in the way that they might to any market correction – focus on the financial indicators and ride out the storm until the world returns to normal. Right now who can honestly say when that will happen?
To my mind success, perhaps even survival, will depend on having a twin-track mind-set – carefully manage the financials but ensure you adjust how your business model operates to ensure the key strategic goals will still be delivered.
As a media company the Business Post operates in an ultra-competitive market and one that was already going through significant transformation prior to the outbreak of the Coronavirus. The advent of smart phones has changed how the public now consumes news and the emergence of global social media platforms has seen 50%+ of all advertising spend being allocated to those channels.
The impact of the emergency on the Business Post has been highly unusual. On the one hand there has been strong public demand for high quality and fact checked journalism and, with people being asked to stay at home, there is more time available for people to follow the news. This has resulted in an upside for both the sales of our newspaper and in paid subscriptions to our digital service. On the other hand advertising revenues in the industry have fallen sharply by between -35% and -50% as advertisers cut expenditure, postpone campaigns or have simply closed up for now.
The problem for all print media businesses, is that advertising revenues make up a large proportion of total sales. A revenue fall-off to this degree has a series impact on the bottom line but this is especially true for print media businesses which have a high fixed cost base and already operate on thin bottom line margins.
Since Kilcullen Kapital acquired the Business Post back in October 2018 I have been overseeing a transformation project to move the business from exclusively being a traditional print product to a modern multi-media offering. In the prevailing business environment the temptation is to park the strategic projects, stop investing behind change and wait for the economy to reboot. But for me that is just not a viable option. Strong discipline has to be successfully married with moving the strategic imperatives forward and adjusting the business model to operate in a new norm. For the Business Post we’ve focused on cutting back and saving on costs but we also continue to work on and invest behind the strategic initiatives that will make the difference to our business in the long run. Anything else just won’t be good enough.