All businesspeople around the world are concerned about how the coronavirus will impact their businesses. Small and medium enterprises situated in UK are no different.
I’m not a doctor and I don’t know anything about virus pandemics, but what I know for sure is that sales disruptions in any business can have bad financial consequences.
Take China as an example: many businesses have already failed because of the chaos coronavirus has caused for small, local Chinese businesses.
At this first phase of the virus crisis, the distribution of many businesses which rely heavily on Chinese products has halved, been delayed or been cancelled altogether as Chinese companies close.
In my opinion, businesses in different sectors will suffer differently, and companies involved in transport, hospitality, chains, airlines, luxury goods and retail will be those hardest hit.
Unfortunately, most business insurance doesn’t cover the cost of business interruption as a result of a virus pandemic.
Below are a few tips for business owners concerned about the impact of the coronavirus on their business:
- Don’t panic: In periods of crisis, you must keep calm. Becoming very stressed and not knowing the consequences of the coronavirus crisis will not help you at all. You need to be 100% prepared to make important decisions quickly. Being calm will increase your chances of making the right decisions. Also, be careful what you read.
- Act: Don’t leave for tomorrow the decisions that you need to make today. Not acting now could cost you twice the amount as acting quickly. Not acting now could cost you the future of your business.
- Measure the real impact: Periods of crisis affect different sectors and markets in different ways. Some businesses suffer more than others. Make sure you understand the real impact of the crisis on your business.
- Monitor your financial performance: The best advice I can give to SME business owners at this moment is to measure their finances on at least a monthly basis. I have seen too many business owners who only look at their financial results every three months, six months – or even just once a year. You should look at your financial performance as often as you can – perhaps on a weekly or monthly basis.
- Reduce your business structure: If you feel that your business sales will decrease hugely because of the crisis, be prepared to reduce your business structure.
- Stay focused: This is a time to focus on your business. You should allocate all your time and energy into the business you have been working hard to grow and not into a new one, unless the new business opportunity looks very promising.
- The number of employees should be the last thing to be reduced (for SMEs): Every time there is a virus pandemic crisis we start hearing about big employers reducing their workforce. In my opinion, the impact of sending employees home in a SME environment is not the same as in a big company. Most SMEs work in a very organized way and having less employees could mean losing control of business operations. The uncertain situation of other employees could also trigger a disastrous consequence. They may start thinking they will be the next individuals who will need to look for a new employer, and that could make maintaining employee confidence very difficult.
- Don’t let other people’s opinions affect yours: Some people get more concerned than others when facing a crisis. You should listen to them carefully, but you cannot let them change your mind. Follow your intuition. You are in charge of your life and your business. You are the one with experience in your business, not other individuals. Once again, bear in mind that the coronavirus affects different markets differently, and can also affect businesses in the same market differently.
- The coronavirus crisis will not last forever: Your business could have a period of turbulence, but you must use all that you have learned as an entrepreneur to survive.
- Working capital: Make sure you calculate how much your sales and profit might decrease as a result of the pandemic, and if necessary, apply for extra financing as soon as you can. Don’t leave the application to the last minute. Always work with the worst case scenario.
- Keep your employees informed: At the moment, the overall risk of your employees contracting the coronavirus through attending their workplace is low, but you need to keep well informed. You also need to communicate to your employees to make sure they understand your responsibility as an employer and what they should do if they become contaminated.
You must read the guidance issued by the UK Government on 25/02/20: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/guidance-for-employers-and-businesses-on-covid-19