With BDC predicting a global economic recession in 2020 as a result of the COVID-19 pandemic, many businesses are wondering how to protect themselves through these uncertain times. There are two distinct phases that we need to consider when planning for the continuity of our business through the pandemic: scaling back and scaling up. In this post, we’re going to focus mostly on the scaling back phase but there are some important notes about the scaling-up phase in the final sections.
- Stay tuned in
It can be easy to get sucked into the social media hysteria amidst a global pandemic but as a business leader, the first thing to take into consideration is where you are sourcing the information upon which you’ll be basing your decision-making. Along with the agencies linked below in the useful links section, you should also keep a close eye on your federal, provincial, and municipal governments and their respective health authorities to ensure you’re basing your business decisions on factual information rather than media hype.
- Ensure safety
Once you are armed with valid information, its time to put your decision-making to work. Use the following questions to determine appropriate actions to ensure the safety of your team and community:
a) What contamination points are present in my business?
b) Are any of our team members exhibiting symptoms of illness?
c) Have any of our team members travelled recently?
d) Is our team comprised of members from the high-risk segment?
e) What parts of our operation must be shut down entirely?
f) What parts of our operation must be modified to control the risk of infection?
g) What safety equipment and cleaning supplies must be made available?
h) Should we create or update any existing policies to ensure we are compliant with the directives being handed down by health officials?
i) Are any of the actions you’re taking as a business likely to implicate you or your business in a legal suite when this is all done?
You might even consider taking a short course to improve your awareness of what a pandemic really is and the safety considerations that you must take.
- Ramp up communications
Nobody likes to be left in the dark especially those who count on you for paychecks to make their bills and those who have paid your business hard-earned money to deliver your product or service to them. Ensure your customers, vendors, team, and community are privy to the actions being taken within your organization to protect everyone. Consider sharing some of the insight you’ve gleaned from the process of protecting your own people and business by writing a blog (like this blog you’re reading) to support your colleagues in business.
- Mitigate risk
Incorporation has been on our radar since day one but we were awaiting certain financial targets to be met before we jumped on it. Enter SARS-CoV-2 (the name of the virus that causes COVID-19 disease) and the threat of a severe economic depression in Q2 2020. Incorporation became a necessary step for us to protect the personal liability of the founding partners. While incorporation was a necessary step for us and it may be for you, mitigating risk for most businesses will mean controlling liabilities and converting variable expenses to fixed expenses.
- Convert variable expenses
Now is the time to sit down with your financial advisors and look at your expenses. What is absolutely necessary given the new look of your operation while your preparing for the scale-up phase? Now is a time when you want predictability so look at your variable expenses and try to eliminate them or convert them to fixed costs where possible. Other expenses might be able to be deferred but make sure you touch base with your vendors before deciding something can be deferred. Try to remember, your vendors are just trying to make a living as much as you are.
- Cash flow planning
When was the last time you did a cash flow plan? For most, cashflow planning is something that was done when they wrote their initial business plan but this vital tool of planning has been otherwise ignored since. Now is the time to get back into cashflow planning. BDC recommends planning a four-week recovery period that gets pushed out as the situation unfolds and we get a better grasp on how long this is all going to last. BDC expects to see things starting to rebound in Q3 2020 and resolve in Q4 2020 depending on if we can actually get the virus under control and the situation isn’t exacerbated by the self-declared “invincibles” who are foolishly ignoring social distancing directives.
- Leverage the supports
All levels of government are working in concert better than I can ever remember in my short lifetime, announcing a massive stimulus package designed to keep money in the pockets of ALL Canadians. If you’re not actively seeking to leverage all qualifying supports being offered to you, your team, and your business then you are setting yourself up for failure.
More information about Canada’s COVID-19 Economic Response Plan can be found here.
- Stay positive
Leaders are the people who find opportunities in hardships and help others live to their highest potential in times when they bear the weight of the world. But the true test of leadership is being able to do these things for yourself. No doubt these are tough times but I assure you there will be an upside to all of this. Likely different in many ways from the world that seemed all too familiar just a couple weeks ago. It’s incumbent on you, the leaders of our economy, to paint the vision of that new future for your teams to rally them behind your shared mission and keep pressing forward.
By now it should be evident that our goal in times of uncertainty is to create certainty. Understand the landscape. Plan for different scenarios. Be safe and take care of your neighbours.
I hope that this has been helpful to you. If you have more ideas to help our fellow SMEs survive the ensuing economic depression, please share them in the comments or by emailing firstname.lastname@example.org
Stay safe. Stay home.