POST-COVID19; Steps Companies Should Take to Ensure Business Continuity

COVID-19 has not only affected almost all nations’ economies but also every other element that makes up the economy. According to the World Bank Group, Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries. SMEs account for the bulk of businesses worldwide and are vital players in job creation conversations and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in rising economies. These numbers are significantly higher when informal SMEs are included.

While different countries have adopted and still adopting several unprecedented measures to prevent further spread (or flattening the curve)of the new coronavirus and prevent the collapse of the healthcare system. These measures directly impact our lives and sources of livelihood.

Most business owners have been forced to stay at home shutting down their business, making the income statements negative. The situation gets even more complicated because it is not yet clear how long the measures will last or how extensive they will be. Unfortunately, the only thing that is clear is that as a result of global economic ties, the impacts of the crisis has been greatly felt by many SMEs.

Taking experiences from businesses that have bounced back from accidents, natural disasters or pandemics in several regions, these are things SMEs should need to holistically consider to bounce back after this pandemic. Especially for regions that are reopening their economies.

Assess the impacts of the pandemic on your business from the operational, human, and financial perspectives.

This may need the help of financial and operational evaluators, but business owners must carry out a thorough assessment of how the pandemic had affected the entire business. Most business owners will make several inaccurate assumptions. To be able to understand the real situation of the business, overall business access needs to take place. This will guide the best fashion to inject funds, where you need outsourcing and other vital details. In addition, you also need to look at the number of staff that have been affected by this pandemic, those mourning, what you can do to help bring them (your staff) back mentally and emotionally as their productivity and human errors are at stake if they resume working immediately.

Closely Monitor and Manage the cash flow.

More than anything else in business, SME owners stay on top of their game by understanding what the cash flow says and keeps monitoring the report/statements cash at least monthly to keep their eye on the heartbeat of the business. These critical numbers tell you just how much is coming in and how much is going out of your business. Making more than you’re spending? It’s all good. Is cash flow regularly edging into the red? Not so good. Do you still have enough runway to survive? You need to know.

Bouncing back from a pandemic would have affected your cash flow especially if you are not in the essential commodities system. Here are steps to follow to manage it for the next 12 months of bouncing back:

1. Try to automate the monitoring of the business cash flow regularly.

You will get busy bouncing back to business because your objectives would have changed. The last thing you want to waste time on is manual processes of cash flow management. So, make use of online accounting software such as Accounteer. It makes it simple to reconcile your accounts and generate reports. Because your information is secure in the cloud, you can easily stay on top of your cash flow wherever you are.

2. Reduce Costs.

Focus on recurring monthly, quarterly, or annual expenses. Can you cut back on utilities, rent, entertainment, travel, insurance, or payroll? Can you renegotiate the terms of services outstanding loans or leases?

3. Cash in on unused assets.

Do you have the equipment/items you no longer use or inventory that’s becoming obsolete or generally does not add up to your core business operation? Consider selling it to generate quick cash to increase your survival rate post-pandemic.

4. Lease equipment instead of buying it.

By leasing vehicles, computers, and other business equipment, you get access to the latest features and avoid tying up cash — but you still get to expense the lease costs on your business taxes.

5. Send out all completed invoices.

Send invoices when the work’s completed or products are delivered. There is no need to wait 1 day extra. You can try to use accounting tools that have invoice monitoring functions such as Accounteer. At a time like this, try to figure out the main decision-maker and send the invoices to them directly so it does not get mixed up with other old mails/files.

Use accounting tools to design your invoice for easy readability and assured mail delivery and also activate instant payments on the invoice to enable them to pay the invoice with their card instantly. Accounteer has all these features to help small business owners.

6. Speed payments by offering deals.

Consider offering your customers incentives, such as a percentage of the total, for early payments. Do the math beforehand to ensure the tradeoff is worth the loss. Remember that getting paid early is better than no money at all.

7. Ask for deposits or partial payments on large orders or long-term contracts.

It may not be one of your values as a business, but post-pandemic is usually a serious time, and measures such as asking for deposits only makes you know the most serious customers and jobs to take on. The goal is to generate enough cash to finance your activities until the economy gets better.

Address the impact of the pandemic on obligations arising from contracts you have signed.

As the global impact of the outbreak worsens, there are several business disruptions with strong legal implications. As the day passes, the risk of businesses being unable to perform their contractual obligations increases.

For instance, if you have stated the completion date of a particular contract for a specific time but due to a hindered commercial activity, you cannot meet up. This has legal consequences except there are provisions in such contracts that addressed unforeseen incidences such as this pandemic. Business owners should not assume the other party will understand there was a pandemic. They must affirm it to avoid being sued for compensation.

Legally, these are things you can consider if the only reason why the contract was defaulted is caused by a pandemic, the defaulting party might be relieved by invoking the following as a defense:

• the pandemic has triggered the force majeure clause under the contract; or
• the contract has been frustrated by the pandemic,

such that the innocent party will not receive compensation for non-performance of the contract.

The frustration of the contract should only be invoked in the event of a pandemic if the contract does not contain a force majeure clause or the clause does not cover a pandemic. Speak to a legal person of the implications of al outstanding contracts and ways to frustrate the contract.

Address Current key risks and ensure business continuity (via a plan)

The main goal of post-covid19 is business continuity. The following basic Business Continuity Plan components should be reviewed to ensure concerns are addressed and processes are in place to minimize loss or the temporary cessation of key business processes.

1. Key contacts: Identify and confirm all primary and secondary key contacts that must be made aware of a business interruption.
2. Plan distribution list: Identify and confirm names, addresses, and contact information of those that retain access to one or more plans.
3. Document a Recovery plan: follow the following plan to develop a recovery plan for your business.

• Identify/develop parameters of business continuity strategies with regard to each identified risk/threat. This includes incremental processes and necessary procedures required to recover each critical business process.
• Ensure communication methods and backup equipment will be adequate for each trigger event.
• Response checklist timelines may include increments such as 1st hour, 24-hours, 48 hours, one week, one month, and long-term recovery.
• Identify Critical Staff, at a minimum, for each critical business process.
• If necessary, provide team training on business continuity, in the event that core or previous primary team members are not available.
• Effective customer relations and communication may be critical in retaining clients and maintaining positive relationships during a business interruption.
• Develop an Alternate suppliers list. The consequences of a supply chain failure on associated key business components can be crippling. Through the alternatives list, you can save many things.
• Incorporate lessons learned into the plans and necessary training
• Periodically evaluate critical business processes to ensure that evolving business practices are captured.

While doing all these, every business owner must remain optimistic and have more opposite energy among team members and encourage them to be productive so the business can bounce back stronger than it ever was.