Originally published on https://www.samanthahunter.co.uk/
As the outbreak of the Coronavirus continues to disrupt both large and small businesses globally, affecting vast supply chains and financial markets, many individuals are deeply concerned for their business and livelihoods. With headlines declaring this a crisis like no other, and with new cases growing each day, the outcome seems bleaker BUT – and here is the big BUT – there are things that we can do as business owners. There are options and opportunities open to us and decisions we DO have control of. Let’s look at what we can do about it and how we can survive in the interim.
Coronavirus – The Crisis
When most businesses experience a crisis (this happens more often than you think –usually about every couple of years), 50% usually have a Contingency Plan in place ready to act accordingly. Those that don’t, tend to have to form a reactive strategy following the event and utilise a Crisis Management Plan that will empower you to manage the response following the event or as it unfolds. Then live it and learn from it, to eventually plan, prepare and respond some Contingency Plans for their next one.
Define the Crisis and Assess your Risk
With any crisis plan, the first thing you do is define the crisis and assess your risk. With the coronavirus on our doorstep, many of us are sat wondering how on earth were we supposed to plan for this; both unforeseen and totally out of our control; no one could have possibly predicted this or the scale of its nature. To add to the injustice of it all, it has gone on to cause a global financial crisis; crashing markets, creating uncertainty and fear in ourselves and customers and causing potentially mass revenue losses and business closures. For small businesses, this can seem incredibly daunting and sad. There is no answer and no guarantee that at the end of this you will still have a business.
In defining the crisis, write a clear and as honest definition of the crisis as you can and update this daily. This is the statement that you and your team will use in all social media and communications both internally and externally.
Detail Your Action
- These are basically your check lists for you and your team to ensure no important task gets forgotten or overlooked.
- Each day identify your tasks and action each items.
- Prioritise them as you would any list and add to them adapt them as necessary.
- Give them a time frame and, if there is more than one of you, designate who is in charge of what.
- Make sure you are documenting progress and sharing with everyone.
Effective Communication and Messaging
Timely, consistent and effective communications is vital for your key stakeholders. Create a contact list of who needs to be communicated with, and when and with what. Keep them updated and keep them current. Information used should only be from credible and verified sources and the communication strategy should be multi-pronged and use all channels of communication available.
Dealing with Financial Fall out of the Coronavirus
With our Crisis Plan, ideally, we are aiming to minimise damage, survive through the unknown of which there is no end date but by which time we hope to then recover quickly and get back onto our path of growth and success. In an ideal world, we would already have that plan written, tested and put it in motion, but even those that have contingency plans probably didn’t see this natural global disaster coming. Arriving unexpectedly and with no warning, the key here is to keep a cool head, don’t do anything stupid and adopt a war strategy while you steer your business through choppy waters for at least the next 12 months. Small business owners, regardless of whether they are providing goods or services, can find ways to weather current and future hardships and uncertainty.
And these times are no different; it is now a time for survival.
So, let’s survive.
How do we survive this Coronavirus and financial crisis?
Alongside the Crisis Plan, we need an emergency response strategy. Your main aim is what can you do to slow down business cash effectively. Look at your finances, especially cashflow and revenue streams and taking your brand, public relations, customers and social media into consideration is now vital at this point.
If you are able to shut up shop or slowdown business down considerably, without any unmanageable cash losses for a while, it is now you consider this possibility. Think about what you can be doing for your business while in its lower state and how you will step back into the arena when the moment is right.
If this is not a possibility or something you really don’t want to do, breaking down your actions into a series of steps is as good a place to start as any.
STEP 1 – AUDIT YOUR FINANCES
First, you must understand the issue and where you stand from a cash perspective, as thoroughly as possible. Perform an audit of your accounting so that you have a better understanding of your outstanding debts, other expenses and your revenue. Look at how much money you need to keep operating and how long you can maintain your business with the drop in revenue. This will make it much clearer in regards to what you have to do to survive.
STEP 2 – START SLASHING OUTGOINGS & EXPENSES
Once you know how your books currently look and how much money you need to survive, you need to start cutting expenses and outgoings. Look into lowering your rates by changing suppliers, if possible, interest rates are going down and look into flexi-working for you and your team, as soon possible, both from a cash perspective and a safety one. Get everything in place so that you and your employees can work remotely. If this isn’t possible, for example if you’re a salon owner, look at cutting hours to work and staggering who is the work place at any one time. Talk to investors regarding delayed payments on loans and dividend payouts.
STEP 3 – RENEGOTIATE YOUR DEBT AND CONTRACTS
Your creditors will want to continue to get paid. In a global crisis, most of us are in similar positions. Don’t leave it until it’s too late talk to your creditors now about delaying payment, paying a lower monthly amount or renegotiating contracts. For instance, if you are paying rent quarterly in advance, ask to pay monthly for the foreseeable future or at least for the next 6 months. Look at any agreements you have in place with suppliers, leases, etc., and any others that are costing you a lot of money and obtain advice on terminating the agreement. If you can’t terminate a contract, it might be worth contacting your counterpart now and getting into restructuring discussions. It is likely they will welcome the conversation to.
STEP 4 – INCREASE YOUR CASH FLOW
In such an extraordinary and severe financial crisis, finding ways to increase your cash flow both short-term and long-term is paramount. Examine your revenue streams. Look at payment terms you offer, allowing customers to pay at a later date or only what they can afford for a reduced service. Consider liquidating some of your inventory through other distribution channels to get the money you need. Look for any possible way that you can obtain more revenue.
STEP 5 – DO YOUR RESEARCH
This isn’t the world’s first recession and it won’t be the last. It’s not the world’s first pandemic and it won’t be the last. Many people have failed and succeeded in these crises, so do your research and see what you can find has or is working for people.
STEP 6 – STRENGTHEN YOUR ASSETS
In moments like this, you and your staff are your assets. Ask for their understanding and be open and understanding with them. Protect them too. Implement policies halting staff travel; stagger commuting, if necessary; modify your sick pay, disability cover and working from home. As advice changes, communicate them clearly to your team. It has been proved that a person’s own employer is the most trusted of all social messengers – that’s over and above, the government, media and friends and family.
For those with Investors, who are still able to help out with cashflow, contact them to tell them where you stand financially, what you plan and what you need.
And don’t forget your customers! If you are a restaurant or coffee shop, don’t think about how you sell your products person to person. Look to off-set your inventory and sell bags of coffee or how you can deliver coffee or food in a safe way. If you are a service, look to minimize losses by providing a digital offering. Just make sure all messaging is appropriate and accurate during a national emergency. Re-evaluate it daily and make sure the tone is right given what is going on in the world. If you change your offering, think about how you keep in touch with your current customers. How often are you emailing them? Checking in on them? Some other ideas are:
- Look to adapt your offering or route to market. Can you easily offer deliveries locally so people don’t have to come to you or into a large communicative space? Be open about how you are preparing products. Ask your customers how they would like to receive your goods.
- Look to introduce or offer gift cards that have longer expiry giving you the cash to forecast now for people to spend it in the later months, when hopefully things will be better.
- Consider can you introduce a small ecommerce offering and use social media to ‘teach people how to use your products? When schools close, can you offer support for things parents can do at home with their children?
- Are there any businesses you can join forces with or collaborate with to encourage sales and economies of scale?
- Look for new business opportunities for those in the cash and companies with long term strategies. Go and look at those smaller businesses as a shrewd investment – they need your help now and this is the perfect time for you to invest in the long term when the interest rates aren’t helping your cash.
- Offer delivery but with a discount on products/ service.
- To encourage people to shop locally, offer a discount to people who can show you a receipt from another local business they have purchased from.
- As mentioned previously, delay payment for services offered, e.g. pay in 3 months or pay as much as you can now.
- If you have been fortunate enough to have planned and have some cash aside for events like these, look to batten down the hatches and work on elements of your business that need improvement; growth strategies, re-branding, forecasting, updating website, LinkedIn profiles, etc. Be prepared and ready to hit the ground running when you are back.
- Have a recovery plan and succession plan in place. Get planning! No one person should have the keys to the entire kingdom! If anyone is taken ill, the company should be able to continue operating. Get that plan in place and use it.
But don’t forget, don’t make decisions without accurate prepared information.
Make sure everything you post / comment or issue is accurate and non-conflicting. Don’t get into a debate in public or on social media on what you think you know or believe. Keep everything factual.
Embrace the change as best you can – tomorrow is another day. There will be opportunities out there and you will find them.
Just remember, in these very difficult times, be genuine with your customers, communicate every day and, most importantly, just as you would utilise a business plan, do so with your crisis and contingency plans – use them , readdress and update them regularly – they are your new business tools.
Things change and change fast, so revisit your plans daily at the moment. Look at your cashflows, adjust any adjustments and keep on top of every action possible. This is not a short term disaster, we are all in it for the long run. You need to contingency plan for at least a year…
So, let’s do this.