Weathering the COVID-19 Storm
This isn’t going to be another one of those posts that explain how our employees are washing their hands and all the things we are doing to be safe. Of course, we are doing those things, but more importantly, we are pivoting as a company to ensure we have runway to make it through this time. This isn't just for Diesel Laptops, this is for the employees we have, their families, and the customers we support. The purpose of this post is to show, that with action and creativity, there is always something you can do to deal with the situation at hand.
As a company, we were several weeks ahead of this. All managers had to come up with a plan to operate as a business with minimal employees in the building. As a result, when the world got weird quickly, we were able to send 90% of our employees home within hours so they could continue to work.
On March 18th, we announced that all our repair information and live diesel technicians would be available to anyone that needed help. You don’t need to be a Diesel Laptops customer to do this, and we had many other industry partners join our cause and pitch in to help. We felt that this was the right thing to do to help our industry.
First and foremost, we have been fiscally conservative as a business. We keep enough cash on-hand to deal with two months of expenses, and we have no long-term debt. That’s right, absolutely zero. We have a generous credit line with our bank, so we drew that down about 50% and threw it in our bank account. We were concerned this would be another 2008, and credit lines would get tightened up. We wanted to make sure we had our money.
We did apply for the Payroll Protection Program under the CARES Act and hope to receive that money in the coming weeks. While we like our financial position currently, having more money in the bank doesn’t hurt anything.
Several weeks ago, we “paused” over $400,000 in monthly expenses. This included travel, all paid advertising functions, and outside contractors that we used for software development and data gathering. We also made sure our employees understood to not make non-essential purchases.
We also informed all our employees that we were putting together an Expense Reduction Committee comprising of employees and managers from various departments. They are now working together, as a team, to find ways to reduce company expenses.
By bringing our expenses down, we were then able to figure out daily sales goals. We communicated this through video to all our employees and encouraged their spouses or significant others to watch. We also had our VP of HR participate in that video so that our employees understand what is happening from an HR and legal perspective. We wanted to be clear on the current financial condition of the company, and what we need to accomplish as a group to make it through this. We have around 150 employees, and the video has been watched around 200 times. So great to see employees going through it more than once!
No business can survive forever without sales. Our historical sales/marketing plan was to get new customers into the sales funnel, then either close them or follow up later. With marketing ad spend going to zero, we’ve had to do some pivots since there are very few new sales leads coming in. Examples of our sales pivot include:
- Focus on current customers. We had one salesperson doing renewals for one product line. We now have 4 salespeople that transitioned into renewals, both expanding on the one product line and branching out into other. The result was our best month ever in March for renewals.
- Buy-back customer inventory. There may be legacy customers of ours that are struggling, or not using the tools we sold them. Our team is now approaching those customers, offering to purchase those tools back for cash or store credit. We can then flip the used tools to future customers at a reduced price, which provides value to them.
- Expanding our rental program. Historically we have never marketed or promoted our rental program. However, this is a great program since it has no contracts and no commitments on the customers’ end. They can also use their rental payments to purchase a new tool up to a year later!
- DieselCare Expanded. We offer an insurance program that only covers a specific product line, and you need to purchase it up-front when you buy a tool. We removed both limits and will allow customers to purchase DieselCare through April 30th regardless of when they bought the tool. This gives our clients peace of mind that if they have their expensive tool stolen/damaged/lost/broken it will be taken care of at no extra charge.
- No Payments for 90 Days. We all expect to be on the better side of this situation in 3 months, so we worked with our financing partners and underwriters to offer a program where new customers can obtain a tool and have 90 days to make their first payment. Removing some of the anxiety and fear of burning through cash!
- Training Classes going Online. With our physical training classes not being held anymore, our team had to do a quick pivot. They were able to offer shorter, online training courses that still help technicians. These classes include how to use OEM software, aftertreatment diagnostics, SCR diagnostics, and much more. We’ve been getting massive turnouts!
The chart below is our sales by week. While we’ve scrubbed the numbers, the Week 1 data is really an “average” week for us. Essentially our sales are down 29% currently from our normal average. I feel that without the programs and actions we’ve taken as outlined above that this would be far worse.
Overall, we are more fortunate than a lot of other companies. Trucks are still moving, and they will continue to need repairs. The tens of thousands of clients we have will still need support, software updates, training, and other services we offer. Even with that, it does have an impact when someone decides to purchase a $10,000 capital good.
My advice for other business owners or CEOs is to communicate, communicate, and communicate some more.
My advice for other business owners or CEOs is to communicate, communicate, and communicate some more. If your employees aren’t getting updates every couple of days, through a variety of different methods, you are making the problem worse. They are all adults; they can take good news and bad. Every employee in our company knows what our sales goals need to be each day, and I know they are working hard to help us hit those goals. We are above that number more often than not, and that is a good place to be right now.
Currently, Diesel Laptops is holding their own, and we are not laying off any employees. I believe we will get funded for the loan under the CARES Act, as this would give me the ability to surely tell our employees that there would be no layoffs through June 1st. I think all our employees would love to have the relief of knowing they have paychecks coming for the next two months.
As a company, I’m confident we are doing all the right things. I have a feeling that Diesel Laptops will come out of this very, very strong and can grow even faster.
Stay strong everyone and keep doing the things we need to do: Social distancing, washing our hands, and following CDC guidelines. Stay safe, and start planning on how we restart life. It is coming soon!. We will get through this!