No doubt you will be thinking about Covid-19 and what it’s potential impact might be on you and your business. You possibly have an overall risk management plan in case – I suggest all businesses now take the time to create a proactive risk management plan specifically addressing Covid-19 and the effect it might have on them.
Here’s some important steps Kiwi business owners can take to mitigate the risk Covid-19 has on your business:
Stating the obvious, consider your supply chain. The impact of Chinese factories being closed is definitely being felt. If you feel that a country you get supplies from (beyond China) might be at risk, you could consider ordering larger units than usual, subject to cash flow. How can you be a preferred customer of your affected suppliers so you are at the top of the list and can have easier access to stock or components? You might need to look at sourcing from alternative suppliers in lesser affected countries or locally, even if it comes at a higher cost. Have a chat to your current suppliers of both goods and services and check in on their ability to deliver consistently and reliably during this time. Forewarned is forearmed.
Some businesses will have a direct, unavoidable impact from this – those in tourism, hospitality, some importers or exporters. You should be checking your business interruption insurance coverage to see if your losses are covered. Legal protection including force majeure clauses in some contracts might be triggered here, so get some good legal advice.
Do a cashflow forecast with some Covid-19 impact assumptions and if your cash position is looking less than ideal, do something proactive about it. I find the majority of small to medium businesses are still not doing a cashflow forecast, yet cashflow issues are the largest stress in a business. It’s super hard to run a business not knowing how your cash situation will look in six months’ time. Find this out now, take the necessary steps and sleep better at night.
Have effective communication and education internally with your team about Covid-19 and how to avoid it. Who knows what information your team has taken in around looking after their health? As a leader, I suggest you do what you can to inform them and do what you can within your business to reduce the likelihood of people catching bugs. Make sure there’s hand soap in the kitchen and bathrooms. Open windows for fresh air. Get cleaners in more. Anything you can do to provide a healthy working environment that might reduce the amount of common colds and flus that we catch each year will end up being positive for overall productivity within your business. Check in with your staff on how they are feeling overall about the virus – people will react to the threat in different ways and you’ll learn how you can support them better.
Prepare for remote work. It’s likely sick leave will go up, with people self-isolating if they feel ill. I’d suggest you proactively encourage people to stay away if they feel sick but when they are only mildly sick or isolated and want to work, enable them to work remotely from home to keep the wheels turning – check your computer security is well set up for your team to work away from the office. Public transport might be affected and there is a small possibility that where your staff live might be a quarantined area, so allow for that. Flexible working arrangements will be important, as will a reconsideration of leave policies.
Share critical internal skills… If anybody is ‘irreplaceable’ as a major cog in your business, integral in your operations and has a skillset nobody else understands, get them to train and mentor a team member now. That way, if they do end up being off work, someone else in the business can do what they do. This is good business practice, anyway – having people like this in the business leaves you vulnerable if they decide to leave short notice, especially if it’s on bad terms. The same goes for the teams in your business – make a plan that if a whole team goes down ‘sick’, another team in your business can cover that team.
Be the best at what you do so you can grow market share. Even if overall consumer and business confidence is dented by the virus – much like the GFC – people still spend money. Let’s say that your market shrinks by 4%; you need to take approximately 4.2% more market share to maintain your sales level. If you are the best at what you do, growing your market share slightly is very achievable. So be growth focused, look for new customers in your current market or new markets, and identify how to truly be the best.
Treat your current customers even better. The last thing you can afford if times are a bit tougher is to lose some of your core existing customers. What can you do to help them realise that you appreciate their business? What can you do to add more value to them? What can you do to be more indispensable to them? How can you help your team to be even better at looking after your customer’s needs and wants? Proactively communicate with them what you are doing to minimise the impact of Covid-19 on them.
Make the most of every lead and opportunity. It continually astounds me how so many businesses don’t have an effective sales system that captures all leads and turns these potential customers into actual customers. When times are a bit uncertain, you need to be even more focused on your sales funnel and understand it fully and know what you can tweak to make a difference. Focus on upping your conversion rate!
Stop the profit leaks in your business. I remember when the GFC hit, it seemed like most businesses considered the ROI of their expenditure about three years too late. We should have been doing it in 2006, not 2009. Whether it is Coronavirus or some other global shock, be proactive in considering what you are spending on now that’s not adding as much as it should, both now and in the future. I’d also review your systems and processes and how your people interact with them to see what isn’t working optimally.
Use common sense. As a leader in your business, it is your responsibility to be proactive, remain positive, focus on the facts and to act with common sense. Your team is looking to you for leadership and guidance. It’d pay to give your team a regular update on your businesses approach and view on Coronavirus. Your team and customers will remember how you treat them during these uncertain times. If you consider what the biggest threats are here to your business and identify what you can do proactively to mitigate, you will be well on your way to protecting your business and staff the best way possible. Get clear on your biggest threats and challenges…
Be proactive in managing this thing so that whatever scale this virus hits, you will know you couldn’t have prepared any better.
Nice one Zac – thanks for the helpful info.