The coronavirus isn’t going away anytime soon. It’s going to have a significant impact on every business, and the asset management industry has already taken a heavy blow. There’s plenty of information out there on washing your hands, but precious little on how to ensure that your business is as prepared as possible to take the hit.
We have gathered a few ideas on what you can do to stay ahead of the curve, and make sure that whilst focussing on your personal health, your business health is also maintained.
Keep your investors informed
You owe it to them. They’ve put their trust and their money in your fund. Keep them calm by communicating your business continuity plans, and what adjustments you are making to your portfolio and risk management. Do this as soon as possible, as you are one of many managers in their portfolio who they are concerned about. Understand where they need help, and focus your efforts on helping them. Furthermore, the value you offer will be increased if you can showcase that you can serve them even in challenging times like this.
Review all of your business assumptions.
Look at your sales forecasts and growth plans. You should be thinking about focusing on servicing existing customers and closing deals, rather than allocating resources to new projects now that there is less demand than expected. Anticipate and plan for ‘banker’ deals, that always closed in the past, do not try closing anything new during this period.
Slow down hiring efforts. Team acquisition and retention is one of the biggest expenses of a startup fund. You do not want it to swell out of control or have to lay off people that you have just brought on. You need to control costs, and think carefully about how to manage your budget against a likely downward revision in performance and fund revenues.
Investment / Funding
If you are on the verge of closing a deal, do everything you can to take the opportunity. We can see that Investors are starting to pull their investments to alternative funds, so make sure you close anything you can asap.
Negotiate longer terms instead of higher fees – Now it’s a time to preserve your capital rather than growing.
Alternative Fund Managers
Now it’s your time to shine again! You should revisit all your previous contacts, see where they stand and help them see the value of allocating capital to your funds. Communication and transparency when the industry is craving leadership and guidance are key.
If investors back out of a deal due to coronavirus fears
It is really difficult. You might have your subscription form already signed and the obligation for your investors to send funds has arisen, but the investors are withholding those funds.
You could attempt to enforce the contract in the courts but this might end up being nearly as expensive as the investment.
If you are in this situation gently press your investors to transfer the funds as soon as possible before they get scared and refuse. Again, negotiate the terms and find a way to make this a win-win scenario. You are their best chance not to lose their money, make sure they know this!
What to focus on in the short term
Review all areas of your IR and Marketing to see where you can achieve quick wins.
Forget about the new projects you want to focus on. Consolidate what you already have in your business and make sure you have gained as much value from those things as you can before things get worse.
It goes without saying that any upcoming marketing (and the rest) events should be cancelled immediately, so that you do not lose deposits, fees, or customer goodwill in the event you have to cancel something at short notice. Even if your event is in a few months time, you should take the step now.
Nobody knows how bad or for how long coronavirus will last so better to get prepared for the worst now rather than betting on the world response being an overreaction.
Although this is understandably a stressful and frightening time for all business owners, believe you can be the ones to ride the coronavirus wave. Show your team that they have strong leadership. Demonstrate to your investors you can react well to changes in the business cycle and increase their trust in you. Impress them with how you are dealing with the emergency. Become the thought leader in your market to risk management, strategy and long-term thinking. This will give you wins later on, especially against all those who didn’t cope well.
We are here to help
The team at Edgefolio have been setup and working remotely for over a month. As tech natives, we understand the benefits of doing so, both in terms of business continuity, and also in terms of improved overall productivity. Feel free to reach out if there is anything you would like help with. Most of all stay safe, and trust in medical science and technology to get us through these trying times.