PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

PREPARING FOR ECONOMIC CHANGES: MEETING THE CHALLENGES FROM THE CORONAVIRUS

By at 3 March, 2020, 10:20 am

BY BARBARA WELTMAN

The world first heard about the coronavirus a month ago. Yet it has intruded on many aspects of life and certainly has a negative economic effect.

People are changing travel plans. Colleges are canceling studies abroad. The stock market took a dramatic downturn for days and days. And drug companies are working furiously to discover more about the virus and to develop a vaccine.

Whether the effect of the coronavirus will turn out to be profound or minor depends, of course, on how long the spread of the virus continues. But businesses should face some possibilities now. Even if they don’t have to implement “worst case scenarios,” important lessons can be learned for similar outbreaks in the future.

An Economic Change is Here

The blog series on preparing for economic change was set in motion before the debut of the coronavirus. An earlier blog explored the economic changes that resulted from previous pandemics. (The coronavirus has not yet been declared a pandemic by the World Health Organization, but it meets the dictionary definition of one.) It also looked into common sense practices in the office to prevent disease (e.g., handwashing and sanitizing work surfaces). But as the infomercials say, but wait, there’s more.

What Can You Do Now?

As small business owners, we can’t control worldwide events. But we can manage what happens in our companies. It’s the aim of all of us to protect the health and well-being of our staff to the extent possible. With this in mind:

Rethink travel plans. If employees are set to travel abroad, determine whether it’s safe (based on alerts from the CDC and World Health Organization, as well as news sources). In the spirit of being safe rather than sorry, consider postponing plans or seeking other means of communication with foreign associates (e.g., teleconferencing, videoconferencing).

Revise leave time policy for affected employees. Given that the required quarantine period for the coronavirus is 14 days, determine whether your current leave time policy is sufficient. Consider an emergency amendment to address the current problem.

Prepare for contingency work arrangements. If employees are quarantined, they may still be able to perform their job functions from home. Before this becomes necessary, create a contingency work arrangement permitting employees to work from home. Be sure to factor in computer safety issues if they log on from personal computers at their residences.

Consider the psychological impact. If the incidents of cases persist, there are more quarantines, and a general malaise descends, employees may experience glum or even depression. Be sure that they are aware of the support they can receive from various sources, including medical experts…and you.

Beyond thinking about your employees, also take a look at the big picture and how a prolonged economic downturn resulting from the coronavirus could mean to you.

Keep an eye on cash flow. If the virus causes an economic slowdown, your revenue may decline. Be sure that you manage your money well and that there’s sufficient cash flow to pay your bills on time and maintain your company’s credit rating. You may want to explore costs cuts now even if not immediately necessary. You can then “bank” your savings to help you through slower times to come.

Review your supply chain. Where do you source your goods? While your location may be unaffected by the virus, the places where you get your merchandise may be and this can impact deliveries of goods, parts, and other items you need for your business. Before such problems arise, look into alternative sourcing to hedge your bet.

Conclusion

Be sure to stay up to date on information from the CDC on what’s happening with the coronavirus. Use this information to make or change your business plans.

Last month’s blog focused on how to make strategic plans as preparation for economic changes. (This month’s blog related to economic change was supposed to relate to debt, but due to the timeliness of the coronavirus, the discussion on debt has been postponed.)

Next month’s blog on preparing for economic changes will focus on marketing strategies whatever the economic changes may be.

Barbara Weltman is a member of SBE Council’s advisory board, and has been a leading consultant for small businesses of every kind for over twenty years. She’s the founder of Big Ideas for Small Business® and has written numerous books on small business operations, including J.K. Lasser’s Small Business Taxes, Complete Idiot’s Guide to Starting a Home-Based Business, and The Rational Guide to Building Small Business Credit. Follow Barbara on Twitter @BigIdeas4SB.

 

 

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