The nasty flu season impacts people around the world. It’s a sober reminder that people drive our economies, businesses and communities forward. The truth is that all business owners need to lead considering the impact of potential events on the bottom line – whether those be events within their control, or those similar to that of the recent corona virus outbreak; which are outside of their control. We hope that your business is able to weather the impacts of the COVID-19 virus!
Businesses can get hit hard in several ways when flu season hits. As we’ve seen first-hand here in Alberta – when people stop travelling, the demand for fuel slows. Without a demand for fuel, the price of oil is lowered and shares in oil stock decline. And, unfortunately, us Albertans know what that means – layoffs!
In the case of COVID-19, we are also seeing a decline in overall business activity. People are implementing quarantine measures and self-isolation to restrict the spread of the virus, and protect their personal well-being. Schools and daycares close down, and parents to have no choice but to stay home with their children. Employers initiate work-from-home procedures, or close down altogether due to lack of customers/clients. All of which further result in a significant number of layoffs.
People stop going out to local stores to shop. And going forward, discretionary spending is kept to a minimum. Investors are watching the news headlines – seeing layoffs and declining investments – as the stock markets now approach a record-low within the last 35 years.
As a business owner, it’s important to take ProActive steps to manage the risks to your business. Here are some tips to help manage the risks to your business as the COVID-19 pandemic progresses:
- Review your insurance coverage. Can you insure what you thought was a “low probability event” now that it has become a “high probability event”? Watch for waiting periods before coverage kicks in.
- Know your numbers. If you are insightful into your daily, weekly and monthly financials, watching your lead indicators closely, you’ll be able to ProActively get ahead of the curve rather than madly grappling with reactive strategies. How can you pivot your relevance and importance to the market given the pandemic. Your messaging generally needs to change!
- Figure out how (and where) you could gather emergency funding– would it come from personal savings, loans, selling assets, increasing your credit card charges, asking friends and family to loan you money, renegotiating mortgage, lease, loans or supplier payment terms? What fixed expenses can you cut? Start paying all suppliers a portion of the amount due so everyone “gets a little” without using all your cash flow until the pandemic passes.
- Get a Disaster Planin place. If you had to close your doors for a period of time, what would that mean for 1) staff, 2) customers 3) inventory 4)landlord 5)suppliers and 6) your banker?
- Reduce your staffing down to a skeletal level if you are not delivering an essential service. People are closing their wallets to virtually all discretionary spending so if your business is selling a “want” rather than a need, your revenues will likely take a hit. Be sure to review your jurisdiction’s regulations for layoffs, employment insurance, occupational health and safetyand other directives that have been updated since the outbreak.
- Require staff to self-isolate if they return from travel
- Identify essential and non-essential employees
- Cross train team members
- Identify critical operations and non-critical operations – what part(s) of the business can you shut down completely?
- Postpone or cancel events
- Limit unnecessary visitors in the workplace
- Hold meetings by telephone or maintain distance of 3m
- Read more about how to protect your workforce
- Return inventory and/or substantially scale back / stop orders from coming from inventory suppliers. Your stock will likely be moving much more slowly than it was before (unless you sell medicine, food or toilet paper).
- Talk with your landlord now to see if they will take partial payments over this period with you making up the deficit over the remainder of the year. As it will take time for your business to recover, try to negotiate several months for the payment of the deficiencies.
- Talk with your banker now to assess your options to pay interest only on loans or defer payments until the pandemic passes. Also, find out if you can access a larger line of credit or convert your current line of credit into a term loan to free up more working capital. Find out if you can access loans with personal assets used as security (i.e. home)
- Delay strategic investments in your business such as capital purchases, systems upgrades, etc. Watch your competition closely as there may be opportunities to take their market share with strategic marketing or acquire them should they not weather the flu as well as you do.
- Cleaning + disinfecting to reduce the transmission of the virus/bacteria. More frequently.
- Develop a communications plan to communicate with customers. Consider hiring a PR specialist to manage your business communications through the pandemic.
It should come as no surprise that we are likely to see things get worse before they get better. Surviving is key!