COVID-19 Business Risk — My “Back of the Cocktail Napkin” Exercise

As the CEO of Senzing, an up-and-coming software company less than two years out of stealth mode, I find myself pondering the consequences of COVID-19 to our business goals — 2020 and beyond.

I wonder, given our underlying business design, where is the risk? Doing this very simple “back of the napkin” mental exercise I came up with these eight risk factors. Then quantified each using a 0–100 score.

[Note: I encourage folks to improve on this simplistic model, e.g., weighting some items over others, adding new items, etc, etc.]

OPERATIONAL RISK

1. What % of the workforce collocates?

2. What % of efficiency is lost if the workforce has to work from home?

3. What % of the product’s bill of materials rely on at risk 3rd party products?

4. How difficult would it be to source these bills of materials from elsewhere?

Total Operational Risk (0–400): ____

SALES RISK

5. What % of the business depends on discretionary consumption, e.g., concerts, vacations?

6. What % of the cash flow is recurring revenue that will NOT survive the next 12 months?

7. What % of the cash flow requires new sales, i.e., is NOT existing recurring revenues?

8. On average, how many weeks does it take for the product to return an ROI? (100 max)

Total Sales Risk (0–400) ____

TOTAL RISK (0–800) ____

By my estimation Senzing’s current Total Risk is 134.

With all this in mind, the question is: given the Senzing product and our business design, where should our focus be right now?

For Senzing, I believe our focus should be on new business opportunities whereby our customers can achieve a Return On Investment (ROI) in under nine months — because when top line revenues are collapsing, “cost take out” is a necessity.

What’s your score?

Where is your focus?

In any case, let’s all do our best to thrive and prosper … to the best of our ability as we navigate this uncertain time.