Through his work at Avenu, CEO Paul Colangelo has seen his fair share of major crises and provided invaluable guidance to cities and organizations looking to stay strong during a disruptive event.
What is the first priority for government entities and organizations worried about a crisis?
Maintaining a steady revenue stream while ensuring your employees are prepared to work under unprecedented conditions is key. Large scale crises directly threaten existing revenue structures. At the same time, work efficiency is undermined by disruptions to the normal work patterns. For these reasons, a crisis can easily overwhelm a poorly prepared organization. The very first priority has to be putting a plan in place to unlock new revenue and keep employees efficient.
How should organizational leaders approach crisis preparation?
The core task of a leader during a crisis is communication. You have to communicate well, both internally or externally, in order to weather disruption and thrive under conditions of uncertainty and change. Good communication is simply indispensable; even the most robust organizations will fumble a major crisis if they neglect to communicate.
What do organizational leaders need to know in order to prepare the most effective crisis communications?
Every organization today thrives on good data, and so internal data collection and data analysis are crucial to building up the specific knowledge base you need to act intelligently and communicate effectively. Organizations must perform internal risk assessments to identify vulnerabilities, and they must study and understand their own inner workings. Many government entities, for example, are sitting on hidden revenue simply because they don’t have the data available to identify lost tax revenue streams or discover regulatory non-compliance. Being equipped to unlock that hidden revenue could be lifesaving in a crisis situation.
What tools can organizations use to better prepare?
Automation is an invaluable tool in any organization’s toolbox. Automated revenue management systems and automated data analysis can both eliminate costly human errors and provide more transparent data. At the same time, automated systems can free up human work hours for more valuable labor and allow organizations to direct employees towards essential tasks during a crisis. And automated systems are disruption proof; good automation can mean the difference between success and failure where flexibility and continuity are key.
What other resources should organizations consider in preparing for a crisis?
I think that partnerships are an often overlooked and unduly neglected aspect for crisis preparation. Many third-party vendors can provide additional services at scale that can help an organization overcome any internal weaknesses or vulnerabilities. Public-private partnerships, and even public partnerships between governments or districts, enable resource sharing and coordinated problem solving at a level that can be vital when revenue is tight and the crisis presents unprecedented challenges.
What is your final takeaway?
In my many years of experience, one thing in particular has impressed itself upon me: most cities and organizations simply aren’t prepared for a crisis, and once a crisis happens, it’s almost always too late to start preparing. Organizational leaders have a responsibility to act early. That will mean making investments in infrastructure and technology. There’s simply no substitute for doing so.
In his long career, Avenu president Louis Schiavone Jr. has weathered many crises, including several global ones, and helped thousands of customers weather their own.
Have you found this recent crisis to be more difficult than others in the past?
COVID-19 has been unlike anything our country has seen before. Many businesses, organizations and local governments were not prepared for the pandemic, the economic shutdowns, the loss of revenue and the rapid shift to remote work. Crises are usually unexpected, but they’re often short-term. The combination of the unexpected, the uncertainty and the long-term has made this recent one much more difficult for our clients.
What should be a company’s first communications priority during a crisis?
Reach out to your clients immediately. Never wait for the client to call you. Ask what their biggest challenge is and come prepared with solutions you can offer. Remind yourself to remain calm, clear and consistent in all of your communications.
Do you have any tips for leading these crisis calls with clients?
Keep the messages simple. Prepare a list of talking points before speaking with a customer. These should be simple and straightforward. Don’t add stress with complicated communications.
What is the best way to respond to a client with difficult demands or needs?
Always be true to your word, and don’t overpromise. Only promise if you can deliver on that promise. Be honest about what you can do and can’t do. If you know you can’t deliver on something, or you aren’t sure, it is better for both you and the client to be upfront about this.
What is something you’ve learned during the recent crisis?
Consistency is key. Scheduling a regular call with your customers is especially important during times of crisis. And maintain this consistency after the crisis has subsided. A crisis call shouldn’t be the first call you’ve had in a while.
What can companies do now to prepare for the next crisis?
Always have a crisis playbook that can be adapted to any situation. We might not be able to predict the next pandemic, or weather situation, or power outage, but companies should have a foundational plan and predetermined chain of command for dealing with things like rapid shifts to remote work; evacuations; damaged servers; ransomware; and more.
Do you have any other tips for client-facing businesses?
Don’t take anything personally. People deal with crises in different ways, and you never know how a person is being affected personally. Maintain your calm, be empathetic and do the best you can do. Listen more than you talk. If you keep these points in mind, you can gain and build on stakeholder trust that will last long after the crisis resolves.
Louis Schiavone Jr. is president of Avenu Insights & Analytics.
The June California Legislative Update covers the passage of the state budget and a number of bills related to the CARES Act. staff is currently monitoring 15 bills that seek to modify existing local taxes and impose new fees. This update provides the latest information on this legislation as well.
On June 15th, the Legislature passed the State Budget Act for the 2020-21 fiscal year. Our understanding is that the Legislature and Administration have not yet reached a final agreement; however, they have agreed to continue discussions and keep working on a compromise. The Budget Act and two trailer bills were sent to the governor and are further described in this report.
Governor’s Office of Business and Economic Development: The Legislature’s budget approves a total of $100 million to support the California Infrastructure and Economic Development Bank’s loan guarantee program that provides financial assistance to small businesses.
Revenues: The provisions of AB 85 include a total General Fund benefit of approximately $4.4 billion in the 2020-21 fiscal year.
Read the full June California Legislative Update Here.
CLIENT UPDATE #1: Sales and Use Tax: Avenu has been hard at work developing economic assumptions on which to build revenue projections for each of our clients. For many of our clients, Sales and Use Tax is a primary revenue source and one that currently is in a state of flux. The pandemic has caused reduced economic activity, business closures, and uncertainty about the future. The recent Sales Tax Executive Order from Governor Newsom also impacted sales tax cash flows. This communication is intended to explain the lower than normal first quarter 2020 allocations to local governments resulting from the pandemic and the Governor’s Executive Order.
Sales and Use Tax Liabilities Deferred by CDTFA:
Extension Program: On April 2, 2020, Governor Newsom issued Executive Order N-40-20 that allowed businesses with under $1M in tax liability to delay their first quarter sales and use tax filings for 90 days. This action means that first quarter filings for these businesses, normally required by the end of April, could be delayed until the end of July.
Deferral Program: Another state program allows small businesses ($5M or less in taxable sales) to defer up to $50,000 of their sales and use tax liabilities until next fiscal year. For those who request the deferral, the owed amount would be payable in twelve equal installments over the following year and would not be subject to interest or penalties as long as these payments are made. The payments will start in August 2020 and they will not extend beyond July 31, 2021.
Key takeaways regarding budgeting and how to approach the unknown amid the current COVID-19 crisis
Cities across the country are deep into the preparation of their FY2021 budgets, a job that is difficult in the best of circumstances for both City Managers and Finance professionals. However, under the current pandemic conditions, it is seriously daunting and looks almost impossible. This is particularly true for those jurisdictions preparing multi-year projections. The first challenge is doing the projections at all. The second challenge is working with your elected officials, bargaining groups, and community to accept them!
So how do cities prepare budgets in these radically uncertain times?
The key is the assumptions underlying the numbers. In any crisis management challenge, accurate information is critical. However, the more turbulent and uncertain the environment in which the budget has to be developed, the greater the importance of collecting broad data to support grounding assumptions; and the more critical it becomes for staff to share that supporting data and their related analysis with their elected officials.
That brings us to COVID-19 and the unknowns of the rapidly evolving economic landscape. While all cities currently share the same general uncertainty, each community is, in fact, unique. They are different in size. Their business community mix may be very different than the adjacent communities. Their social priorities may vary widely. Their ability to deliver services, and the type of services they deliver, may differ. Their population may be younger or older than other communities. So, while certain assumptions may apply across all of them, others are going to be unique to each community.
With this in mind, how does each city approach budget development?
There are four areas that any city must now consider when building their FY2021 budgets (particularly when building Year One of a multi-year budget), although how they gather information and the resulting assumptions they make may vary widely:
Download our recent White Paper: Budgeting in a Sea of Unknowns to read more as we outline ways to approach budgeting in these uncertain times.