Extraordinary times call for extraordinary measures. There is no doubt that the current situation related to the coronavirus or COVID-19 is extraordinary. This article is intended to help you understand some of the things that you should expect when it comes to your business and COVID-19.
Let me start by introducing myself. My name is Matt DeCoursey, I am the CEO and Co-founder of Full Scale, a Tech Services company with 190 global employees at the time of this article. I am also the co-host of the Startup Hustle Podcast, which I host with my business partner and Co-founder of Full Scale, Matt Watson. We publish 4 new episodes a week where we discuss all things entrepreneurship, including failure and adversity. With that, it’s possible that many or most of you reading this have yet to truly experience something that is as potentially impactful to your business as COVID-19 might be.
I am writing this on March 17th, 2020 a time in which many parts of the world are fully immersed with COVID-19 and many are starting to realize the severity, anxiety and panic-driven effects that are sweeping the planet. I am also writing this article while in Cebu City, Philippines, where the majority Full Scale’s employees are located. I have been here since March 1st and quite honestly… might be stuck here for a while. Why, because the world is beginning to lock things down. At the beginning of my trip, things were more or less business as usual, then things REALLY got REAL. By that I mean, the entire world woke up and realized that the impact of the virus would in fact be global and if swift and immediate action was not taken that consequences could be SEVERE globally. Realizing this, myself and many of the leaders of Full Scale began a level of preparedness and planning that the company had not had to seriously engage in prior to now.
Things we quickly learned we needed to prepare for include
- Should we send all of our employees to work from home
- Should we allow access to our office/facilities
- How and what are the short, medium and long term effects of COVID-19 on your business
- Basic and advanced continuity planning
- Improved security and communication protocol
- Cash flow and future business planning
- Creating specific and meaningful COVID-19 policy
- How to communicate with vendors
- What kind of supply chain interruptions could occur
- How to communicate with employees
- What decisions, actions and communications are a priority
Should we send all of our employees to work from home due to COVID-19?
This isn’t an easy question to answer as it’s broad in nature. The first and primary driver in your decision must be centered around the health and wellness of your employees, their families as well as the clients you might interact with personally as you can or could transmit the virus either direction.
The next thing to consider is, how essential is your local operation? If your business offers some kind of service that is absolutely essential to public welfare, safety or supply chain then you have a much more challenging decision. In fact, you might even be pressed to make decisions that are unpopular or risky. I can’t and won’t tell you what to do, in the end, that will be up to you and your employees. One thing I recommend is to simply discuss it with those involved with your business. This should also include a level of discussion with your and their families. We did exactly this at Full Scale where a large number of our employees voiced to me that while they knew things were risky, they didn’t want to let down the clients we serve, and because some of those clients do important things, their absence could disrupt that.
Another thing you will need to consider is how you can or will handle compensating employees during this time of need. If you close your operation, then you might also close off your employees’ ability to provide for their families during a time of need.
Should we allow access to our offices or facilities?
Once again, a very important question to answer but also a very broad question. In 2020 we have the greatest ability ever when it comes to working from home. However, many businesses or companies do not have this ability or are not adequately prepared when it comes to equipment or technology.
If you are in North America, then you might take for granted that you have high-speed internet or high powered equipment at home. At Full Scale, we had actually prepared for situations where we might have to mobilize our workforce and did so by making the decision to purchase laptops for ALL employees over the last couple of years. While this came at a far higher cost than not doing it, at the moment it allows us to allow our employees to work from home on a broad level.
In the end, we did decide to close our offices, mainly because people were coming to work anyway. While I did respect the dedication, at the same time myself and the other members of leadership decided it was best to embrace social distancing and stay away.
Learn more about my firsthand coronavirus business planning here
How and what are the short, medium and long term effects of COVID-19 on your business?
The answers to this question are going to be wildly different for everyone reading this. ALL businesses will be affected in the short term, some to point of failure. While there will mainly be losers when it comes to this situation, some businesses will certainly benefit. Those are likely to be businesses that provide certain types of remote work tools, video conferencing, some forms of healthcare. Losers will include anything involving travel, live entertainment, hotels, dining or most anything that relies on groups of people to congregate.
Overall, I’m not sure anyone really understands what the overall effect of COVID-19 will have on our lives and businesses. This is something that has never occurred before on this level.
One thing that I found to be REMARKABLY helpful was the March 6th, 2020 letter that Sequoia Capital sent its portfolio companies. Read, “Coronavirus, The Black Swan of 2020” letter here.
Within the letter, they urge everyone to challenge ALL assumptions that you may currently have about your business. I found this letter to be helpful from top to bottom.
Key Points for Preparing for Coronavirus Impact in your Business
- Expect a drop in overall business activity
- Expect supply chain disruptions
- Expect travel and meetings to fall off sharply
Things to Question Within Your Business
- Your cash runway
- Your ability to attract investment
- All of your sales forecasts
- Marketing and the cost to attract business
- Headcount and if you need as many employees
- Capital expenditure or growth plans
In regards to the mid-term expectations meaning late 2020 and 2021. I personally believe that all businesses will feel significant effects of stopping so much of our business activity. It probably deserves it’s own article and with that, the article would be remarkably long because there are SO MANY FACTORS.
My predictions for mid-term expectations include:
- Increased bankruptcy and business failure
- Slow growth of hiring and expansions
- Trickle-down effects from slow to no-pay accounts receivable
- Tightening in the credit and short term availability of capital
- Increased acquisition by well-positioned companies buying failed competitors
In regards to the long-term effects. It will realistically take YEARS to recover from this, even if we quickly return to “normalcy” Overall, this will feel somewhat Darwinistic in the end. My belief is that we will see a strong reliance on the local supply chain. It’s also possible that we can or could see a full-on renaissance when it comes to buying and supporting “local”. In the end, it’s really tough to say and so much of the answer depends on the world’s ability to combat the spread of this virus as well as position itself better for future, similar threats.
Basic and Advanced Continuity Planning
If you have yet to do this at your business, GET MOVING. I will tell you right now, it’s not enjoyable. Why? Because sitting around and planning for Armageddon isn’t a fun thing to do for anyone. However, NOT planning for what could occur makes it really tough to make confident, well thought out decisions on a real-time basis.
In regards to planning here are a few things we did at Full Scale or that I recommend.
- What can you do to cut costs NOW, but do so in a way that doesn’t just end up destroying your business later?
- Which of your clients, vendors or accounts are at the highest risk of churning, slow-paying or are likely to become problematic?
- What are you going to do if or when your revenue suddenly drops?
- If you have to make tough decisions about letting employees go, who would that be and why?
- What are you covered for when it comes to insurance?
- What are you NOT covered for when it comes to insurance?
- How are you going to communicate with your staff when things aren’t “normal”
- Do you have protocols when it comes to communicating essential information?
- Who is authorized to communicate with all of your employees or vendors? Who is not?
- Who has security access to your building and assets? Who doesn’t that might need it?
- What is the order of operations when it comes to leadership, decision making or who to contact? Is that well known by everyone?
These are just a few of the many, many things you need to be aware of, or plan for. One thing that you will certainly not look back on with regret is being prepared to make well thought out decisions. One thing you are almost certain to regret is NOT taking some time to discuss and think about what recourse or action you might need to take in times of adversity.
Improved Security and Communication Protocol
Once again, the business world has not seen an event this drastic occur since the Spanish Flu or the Great Depression. With that, it’s likely that your business isn’t prepared the way it should be. Therefore you will need to create some kind of security and communication protocol.
Security protocols can be created fairly quickly and easily. Not doing this can be a big mistake.
Here are some security protocol items to consider during COVID-19, 2020
- Who has access to our facilities?
- How are we accounting for our assets?
- How can we quickly secure our facilities and assets?
- In the event that someone critical can’t come lockdown the place, who can?
- Do we have remote access setup?
- Do we have access to security cameras or other stuff outside of our own facility?
- Do you have the ability to deny access to facilities from afar?
Communication Protocol Tips
Here are some basic guidelines we used at Full Scale to update and create our new communication protocol.
- Who should contact who in the event of “Insert event here”?
- Who decides what information is sent to everyone and how?
- If someone reports specific things, like a positive COVID-19 test, what information do we gather and how do we assess priority?
- How will we communicate from remote locations?
- Do we have proper bandwidth and infrastructure to ensure reasonable communication?
This overall protocol and your needs will vary depending on your location, industry, size of the company and the overall need for security.
Cash Flow and Future Business Planning
Where to even start here… Why do I say that? Because literally no one knows what to expect in the coming weeks and months. One safe assumption is that your cash flow WILL be affected if not completely cut off.
Cash flow is the lifeblood of any business, so the reduction of or completely stopping it is a MAJOR problem. This, in my opinion, is quite honestly the biggest threat to your business. Your vendors, clients or any that needs to get paid by someone else in order to pay you WILL BE AFFECTED.
Things to consider for proper COVID-19 / Coronavirus Cash Flow Planning
- What clients are likely to be affected?
- What vendors are likely to be affected?
- What lines of credit do you have access to?
- Who vendors are likely to work with you if you slow pay?
- How will you deal with slow or no-pay clients?
- Which of your expenses are a priority if you have to choose?
- Where can you cut expenses?
- How can or will you pay employees if cashflow dries up?
- How long will it take to get assistance from disaster relief or insurance?
Considering and preparing for all of the points I listed above is a SMART thing to do.
Creating Specific and Meaningful COVID-19 Business Policy
What happens if and likely when one of your employees, clients or your own family tests positive for coronavirus? You need to be prepared to deal with this ahead of time. Not doing so is going to result in you needing to do so during a stressful situation.
Here are Tips for Creating a COVID-19 Policy at your Business:
- Where do you stand on employees showing symptoms or employees that have been exposed?
- Do you require any clients, customers or employees showing symptoms to self-report, and to whom?
- How will you track or figure out who the exposed person came into contact with and how will you report this to other employees or clients that could have been exposed.
- What is your overall policy regarding cleanliness, hygiene and methods of keeping yourself, clients and employees in low-risk situations?
- What should you do if an employee or client is on-site, showing signs of illness but not embracing policy?
- What length should or will you require employees to self-quarantine if self-reporting or if managers or other employees are reporting symptoms.
- What is your policy for use of PTO or sick leave for those testing positive or exposed?
There are certainly more scenarios and items that you can list. Overall, it’s much better to list MORE and not need it than it is to list fewer items and need them.
How to Communicate with Vendors
When it comes to proper planning for COVID-19 at your business, the way you communicate with your vendors is REALLY important. You are either in a spot where you are suddenly concerned about your ability to pay them, or perhaps concerned about your ability to get whatever it is you sell or need for your clients.
If your business is suddenly cut off from all forms of cash flow, then it’s likely very possible that your vendors know this as they too are experiencing the same problem with others they do business with. In the end, the best thing to do is open up communication with them and have discussions based on logic and reality.
The worst thing to do is complete avoidance. This will be a HUGE red flag and will likely result in your restock being cut off.
Overall, your vendors want to continue doing business with you after things return to normal. Know and understand that they are likely stressed too. In many cases, they aren’t or won’t be able to get things to you or reply within timeframes that you expect or are used to. In the end, they are people, have families and are dealing with the same issues you are, so have patience and understanding. Doing so will result in even stronger relationships later.
Here are some tips and expectation for vendor communication during COVID-19:
- Be open and honest about your situation?
- Expect longer timeframes for overall communication.
- Ask for extensions or longer payment terms if needed
- Ask about the likelihood of supply being cutoff
- Ask about expectations for delay
- Communicate your COVID-19 policies if applicable
- Remember that you want to have relationships later
- Be responsive yourself
- Offer flexibility for delivery or response times too
What Kind of Supply Chain Interruptions Could Occur
It honestly might be easier to ask, “What kind of supply chain interruptions WON’T occur…” You need to expect both as a business owner and a person that SERIOUS supply chain interruption isn’t only likely, it should be expected. Why? Because we simply are not prepared for this right now.
Supply Chain Issues Likely to Occur During COVID-19, 2020
- Food and groceries
- Medicine and OTC products
- Anything that comes from or relies on China
- Anything that solely comes from Europe
- Increased competition or pricing for scarce items
- Slowness in delivery
- Lack of accountability
- Decreased access to raw materials
- Shortage of drivers or delivery people
Overall, it’s a strong and safe assumption that most, if not all what I just listed will be a reality for not just North America but all markets around the world for a while.
How to Communicate with Employees About COVID-19
Communicating with your employees when it comes to the coronavirus is important. You will need to set some expectations and understanding of how to communicate about them feeling or showing symptoms, when to report, what to report and who to report symptoms too.
You will also need to create some policy related to requiring either work from home or calling in sick based on certain scenarios. Make sure you include timelines, such as… “If you are showing symptoms of coronavirus, you are required to stay away from the office for 14 days or until you show negative results on a test.”
In the end, every policy will vary, but you need to have one. Many of the points that I have already made in this article apply to and can be repurposed when creating your company’s COVID-19 communications or communication protocol.
What Decisions, Actions and Communications are Priority
SAFETY FIRST! By all means, please start with the general safety of those that work at or interact with your business. Not only is it the right thing to do, but after all of this cools down, there will be a lot of finger-pointing at the people and businesses that handled this poorly.
When it comes to times of crisis, leaders rise up to the task or simply fail. So much of this has to do with the priority in which they choose to do things. So what do you choose?
Here are few things to consider when setting priorities:
- Is the safety or wellbeing of people or the business depending on action?
- How many employees, clients, vendors or people are waiting or affected?
- If I don’t act on this now how serious can or could the consequences be?
- How many others are waiting on a task or decision in order to do their jobs or make decisions?
- If I don’t act now will I no longer be able to later?
Overall, you really need to consider what tasks or decisions are of the highest value. It can be that simple. You won’t truly know whether or not you were right until later. When it comes to those you lead, they will appreciate your ability to make decisions quickly, rather than stalling out over and over.
Final Words About COVID-19 Business Preparation
I wanted to end this article by saying that I too am experiencing anxiety, fear, depression, stress, and exhaustion. So you know, you are NOT alone. I do believe that we will get past this. There are LOTS of people and businesses experiencing the same stuff you are. This is a great time to share, compare or perhaps lead with those around you.
Hopefully, you found my insight to be helpful, I truly wish you the best and hope to see you on the flip side of this lame situation none of us asked for.