We are concerned that a number of businesses are at risk given the spread at which the crisis has developed and continues to affect our everyday lives.  There are many articles around about the effect of the coronavirus from a health perspective and we do not wish to repeat these, nor are we experts in health issues.   Countries are in lockdown; governments are reacting to the situation and various financial help is being offered worldwide.  People are unable to gather, sporting events are cancelled, some businesses have already gone under and fear is driving panic buying.   If you are a business owner, now is the time to show your true leadership and the first step is Don't Panic !

The next step must be to sit down in a quiet spot away from any disturbance and think about how the pandemic is affecting your business.  Try to understand how it could or is affecting your business, your staff, your suppliers, your customers, both directly and indirectly. Our philosophy in helping and advising clients is based around three steps:

Planning, measuring performance and growing profits.

Every plan should be written down and we suggest these plans cover 3 scenarios.  Firstly, what if the coronavirus only has a small impact on your business – say up to a 15% cut in turnover. Secondly, what if the effect is medium – say affects turnover by 25-40%.  Thirdly, what if the effect on your business is high – say affecting turnover by 50-60%.  Your plans should include the effects and solution for each level.  Where are we now, where do we want to be and what are the strategies to achieve that.

There are a number of areas the plans should cover.  These include:

a.       What are the essential parts of the business that must keep operating for your customers?

b.       Can the team work from home?   What do we need to action if this is to happen?

c.       Can we keep staff isolated?   Do we have a virus containment policy?

d.       What plans can we put in place to reduce staffing numbers if required? – split shifts, sick pay, annual leave entitlements.

e.       What are our meeting policies with our teams, suppliers and customers?

f.        Can we cover essential functions of the business if key employees become sick?

g.       Ensure your staff are well aware of your plans and what is happening daily.

a.       What is our cash position?   Do we have sufficient reserves to cover 2-3 months operating costs?

b.       Do we have sufficient cash to cover loan and finance payments, tax payments etc?

c.       What stocks do we have on hand?   What are supply chain lead times in replenishment?   How many weeks of stock on hand do we have?

d.       Are our suppliers affected?   Can we order more stock if required?

e.       Be in constant contact with your customers.   Check orders on hand. Check their future expectations.

f.        Calculate break even points for each of the three scenarios.

g.       Know how much down time you can cope with and when to take action.

h.       Can you negotiate with large creditors to preserve cash?

a.       Remain calm and in control.

b.       Be firm.

c.       Don't panic.

d.       Roll out information to staff and clients regularly.

e.       Update policies and procedures as required.

f.        Stay up to date with the facts.

g.       Continue looking ahead, the next day, the next week, the next month.

It is now vital to keep your financial information up to date and know your exact financial position at any time.  Quality data means quality decisions.  Compare actual results to the plan regularly.  Do we have KPI's or OKR's and are they providing lending information about our financial performance?  Act according to the results being achieved.  Analyse the results.  Can we put in place strategies and actions to improve our performance?  Measuring free cashflow is vital and knowing the effects of working capital issues on our cash reserves is important.

Right now, don't give up on any marketing plans.  Every downturn creates an opportunity.  Spend time analysing any opportunities to improve your business.  Look at your costs?  Analyse and implement improvements using the 7 lean wastes every business has.  Now is the time to improve your business model if possible.  Be agile and adapt to the changing business conditions.  This virus and recession will pass, the unknown is when.  What can we do to improve margins and increase customers?  When trading conditions improve, will we be in a position to take advantage of them?

The important message is sitting back and doing nothing is not an option in these trying times.  Those that do will have a greater chance of their business not surviving the pandemic.  Remember the 3 P's – Planning, Measuring Performance and Growing Profits.   We are here to help at any stage, so don't hesitate to contact us.  We are available by telephone, email and video chat as well as in person should you need help on any of the above.  Things are changing daily and rapidly, so don't leave it too late to take action. 

All the best from the Team at

McGregor Bailey