During a crisis it is important to take practical steps to help protect your business during and afterwards. These steps should be implemented into your business plan to be enacted when crisis strikes. However, it is important not to make the mistake of not responding at all, or making too drastic of a change. An appropriate reaction is important to maintaining your business and keeping it afloat.
Here are a range of measures you can take, or should consider, when a crisis strikes.
Business continuity planning
The first step to getting through any crisis is to create a plan. You will need to know what you can do to quickly reduce expenses, to offload stock, etc. It is also important to plan what you are going to do after the crisis has passed to build your business back up. Flexibility is key, each crisis could bring about a unique set of challenges. To begin with here is what you should consider:
- Explore the end-to-end impact of the crisis on your business
- Define risk and tolerances by product/service type
- Make informed decisions all based on strategic assessments. These could be labour, currency changes, costs of materials and logistics, potential disruptions, supply issues, and demand variability. Where you do find weaknesses explore alternatives.
- Reduce debt when you can and reassess projections for large, investment hungry projects. You may need to delay a project or speed up its release.
- Ensure your team is communicating any changes or challenges they are seeing. Develop a culture of initiative. Your frontline will hear and see changes well before the management team.
Avoid laying off staff
Some businesses lay off staff during a crisis, however this is an overreaction that worsens the crisis for all businesses. Often, there are better solutions to dismissing staff. Look to offload trading stock, reduce other expenses, or reduce staff hours before outright dismissing staff.
You should also build a war chest with at least 3 months’ expenses worth within. This can be built in times outside of crisis, allowing your business to push through. To begin creating a war chest talk to your accountant, they can help you portion off a sustainable amount out of your business’ profits to build the war chest.
Protect your workplace and customers
Protecting your workplace, staff and customers is vital. They will all appreciate it, rewarding you in the long term. In all the decisions you make in helping your business survive the crisis, keep your staff and customer wellbeing at the forefront of your mind. Create contingency plans for if the crisis will prevent some staff returning to work, or from visiting overseas clients. Consider setting up infrastructure to allow your team to work from home, and ways to provide your products and services to customers without them needing to physically come into the store.
There is light at the end of the tunnel
As history has proven, after every crisis the world recovers. Markets get back on track, consumers buy more goods, businesses make more money. Often, the ones that make the most money are those that have a strong competitive advantage which attracts customers away from a competitor who is struggling. Often talented staff will follow, attracted to your business, allowing you to improve your offerings further.
It is important to remember that there will be light at the end of the tunnel, so long as your business has taken reasonable steps to adapt and last through the crisis.
Helping your business survive a crisis is simply done through good planning, and a reasonable response. Before a crisis begins you should talk to your accountant about ways you can prepare for one, they will have a range of strategies you can use to prepare. During a crisis, keep in contact with your accountant, adapt the plans you created to the individual crisis with your accountant’s assistance, and implement the plan.
If you want to discuss crisis mitigation and management with an accountant talk to Link Advisors today.