Whether it’s an infectious disease, an unprecedented natural disaster, an act of terrorism or any other sudden catastrophic event, having a business continuity plan in place will help you rise above uncertain times.
The coronavirus (COVID-19) caught most businesses off guard, and many companies are scrambling to adapt to the constantly changing environment we find ourselves in. Performing rapid triage starts with taking the time to assess the situation. Without a clear sense of what is happening, you can’t make effective decisions about what to do.
Here are some questions to work through in order to craft an effective strategy for dealing with any emergency your company might have to confront.
Top priority for your business in any emergency is to assess the financial implications of the event and take steps to preserve your cash flow. This will allow you to stay afloat through the (potentially) lean times ahead.
- What is the worst-case scenario for your business if there is a global pandemic? While this might feel like a panic-inducing question, taking a level-headed approach to the reality of the situation is the only way to really plan effectively.
- What will it look like for your business if you lose 25%, 50% or 75% of revenues? Craft an actual plan for each of these scenarios. Keep them in mind as you work through the following questions, as the decisions you make will be hugely contingent on the reality of any revenue loss.
- Do you know how many months of working capital you have on hand and do you have access to an injection of cash if needed? Get clear on these numbers and map things out based on those figures.
- What expenses are essential and which are disposable? Take an inventory of your business expenses — all of them — and then break them down into those that are clearly essential and those that could be discarded or furloughed. Once you have the list, rank each item in order of importance. Cutting non-essential expenditures as quickly as possible will help you preserve cash and keep business operations moving forward for as long as possible.
- Can you delay payments to vendors? Touch base with them to find out and ask key suppliers for help. They might extend additional credit or give you more time to pay. Communication with your vendors, clients, and suppliers will be key for weathering the storm.
- What projects can be postponed or set aside until after the situation has stabilized? Do you have capital expenditures that are ongoing or upcoming that will have a significant negative cost impact if you continue to move forward? While it might make sense to push forward certain initiatives at this time, others might be better left behind to return to in future.
Obviously, a global pandemic is having a huge impact on the labor force, but the effects differ greatly between industries. If your employees can work from home, you have different considerations to tackle than if work from home is impossible. Worker safety should be your top priority, and it’s necessary to figure out how to effectively support everyone in accomplishing their work.
- Can the business operate remotely or from a different location? This is the first question that most employers are tackling. For digital and consulting services, the transition to work from home will be smoother, but there are still challenges to work through.
- Are your employees who can do their jobs remotely fully prepared to work from home for extended periods of time? Do they have the tools they need to remain productive? Here are some excellent tips to help you and your employees navigate a transition to working from home.
- How will you handle illnesses with your employees now? Do you have a clear policy and strategy in place for when people get sick? Is your leadership team one that leaves your workers feeling comfortable coming forward and being honest about illness?
- Do you have an adequate ‘staff care’ plan in the event families of staff are affected?
- What plans can you establish in the event that significant numbers of your employees cannot work due to illness? If you don’t already have one, create a chain of responsibility chart so that it’s clear who can and can’t fill in if key employees fall ill.
- Do you have sufficient cross training in place if a key person or people are unable to work? And are your systems of record such that others can pick up where someone leaves off?
- How can you delegate responsibility to focus on the urgent issues?
Supply Chain Implications
If you are in the manufacturing industry, it’s vital to get a clear understanding of how an emergency will affect your supply chain.
- How might your supply chain be disrupted? Even if you aren’t in manufacturing, are their supplies that your company relies on? Contact your vendors to find out what they anticipate moving forward. Has the demand for their products increased or decreased? Have they slowed or stopped production and will there be shortages?
- What inventory do you have on hand, and which components are most vital?
- Do you need alternative suppliers for resources/materials/services?
- Are there alternative plans you can put in place in case your supply chain is disrupted?
- How will your business be impacted in the event of significant travel restrictions? How are your supplies delivered?
Once you’ve worked through these questions, take action as quickly as possible. Additional delays will only deplete your resources, and especially given the current climate of uncertainty, the more you can do to safeguard your resources, the better chance you have of weathering the storm.
We also recommend calling on your business advisors for guidance. Now, more than ever, having a trusted business coach or peer advisory group will help you make the best decisions for your business — especially if they’re difficult ones. You don’t have to face this challenge alone. Join one or our Virtual Boards or reach out to us today! We’re here to help.