The topic on everyone’s lips at the moment is coronavirus. Not just in the media and social media, but also down the pub and over dinner in your favourite local. (Get your visit in now as very soon they’ll either be closed – as in Ireland – or practising social distancing if they’re big enough).
I don’t intend to add to the noise but if this develops in the UK anything like it has in Italy or in South Korea, then the effect of the pandemic on industry and the wider economy will be severe.
This is not about scaring the living daylights out of businesses, but rather to help them consider the likely outcomes and try to be prepared as best we can – in particular for SMEs.
While business owners should start by focusing on the health and safety of their staff and colleagues, (by following government advice on the matter), here are the other things they should be doing to protect and grow their businesses during this time:
1. Conserve cash to weather the storm
I realise this has a knock-on effect on the economy as a whole as less money is in circulation, but there are certainly going to be redundancies and bankruptcies as a result of this pandemic.
Your job, for your business, is to limit the former and avoid the latter. Place the business on pilot light flame until you can figure out what’s likely to be happening in April/ May/ June in your industry.
This is especially the case with start-ups, early-stage growth businesses and SMEs. If your business is heavily leveraged, talk to your bank, (traditionally not that much use to SMEs), but they are being encouraged to relax debt repayments, at least in the interim. And…get hold of your accountant!
The recent Budget announcement contained lots of promises to help protect against the economic effects of the coronavirus (and there is likely more to come as the seriousness of the pandemic properly dawns on the Government). Get to the top of the queue as the inevitable bureaucracy will delay any payments to those who really need it – by weeks and even months.
2. Secure the supply of key ingredients
While the situation facing the tourism, hospitality and travel industries is dire, ultimately, people will still have to eat, meaning the food industry has a better chance of fighting the economic stagnation caused by coronavirus.
At the moment, consumers seem focused on purchasing staples like dried pasta and canned goods. However, they are likely to tire of this and will probably return to their normal buying patterns soon.
As pub, restaurant and out-of-home consumption dwindle, retail channels will be in strong demand – and possibly over-run.
For businesses in this sector, emphasis needs to be placed on securing the supply of key ingredients now (many may come from more affected areas, potentially areas suffering significant disruption – think of Northern Italy) and packaging (large quantities of food and drink packaging is manufactured in China).
Focus on securing continuity of supply from existing sources and/ or explore alternatives (which may well cost more).
3. Do some scenario planning
Come summer, (when we are hopefully coming out of the first wave of disruption like China appears to be now), what will likely have changed? What will you need to do to get back to where you were before all this happened?
Will it ever be possible to get back there?
Run some best/ worst/ middle of the road financial projections based on new assumptions taking account of the risks from and effects of the virus on your business/ industry.
If you need cash to survive any of these scenarios, figure out now how you could achieve this with the least possible pain. Do this now rather than leaving it until your back is against the wall.
4. Focus on opportunities
We may well be facing a new economic reality when we come out of this. Some avenues may be closed to us while others may open up. One of the great strengths of start-ups or early-stage growth businesses is their agility.
Opportunities to pivot may present themselves, but only if we recognise them. I heard so much from businesses over the last 2 years saying they couldn’t really prepare for Brexit as they “didn’t know what it would look like”. This is a fallacy on both counts.
With coronavirus, we certainly know what it looks like – again, see Italy and South Korea. We have real-life case studies currently running approximately 15-30 days ahead of the UK. We can learn from how they have responded to the virus and can now begin to understand the challenges and opportunities that are likely to develop over the coming months.
5. Change the way you think
I said I wouldn’t add to the noise on what we as individuals should do to help stem the spread of the virus. However, I heard a medical expert speak on Irish national media recently and what he said made me think. When asked what we should all do differently, he said:
“Well, nothing much really. I mean, we’ve always been washing our hands, haven’t we?! It’s less about what we do and more about how we think. If we all had the attitude that each of us is already infected and our actions are more to do with protecting others – i.e. those who aren’t, rather than protecting ourselves, then we’d have a chance of halting this virus before we have to encounter a drastic loss of life.”
I think that if we’re equally smart about our attitude to economic survival and returning to growth, we can also avoid drastic losses for our businesses too.