Coronavirus has caused considerable damage to the economy, leading to the collapse of production and financial systems. Businesses have closed across the country, and the ones that remain open are fighting for survival. Once they have ensured their short-term recovery, the businesses that remain must consider their long-term plans.
In particular, the approach they will take to building resilience so they can deal with catastrophic incidents like coronavirus in the future.
Coronavirus has permanently changed the way businesses operate. If you’re a small business that has made it through the pandemic, now is the time to review the impact it has had. Taking the lessons learned, you can build resilience into your organisation and ensure your future survival.
The most important aspect of any small business is their finances. To build financial resilience, you need to know how your business is performing. Understanding and managing your cash flow is essential. Your accountant can provide you with cash-flow projections so you can plan ahead and make adjustments if you need to.
Ensure your contracts include adequate cancellation or service suspension clauses and renegotiate payment terms with your suppliers and creditors if you can. Make sure you pay your suppliers on time as they will be more open to providing you with flexible payment terms if you need them.
You may also want to set up credit facilities with your bank to use in the future to safeguard your business.
Many business risks are interconnected and will affect more than one area. Take a holistic view to help you understand your vulnerabilities, identify opportunities and monitor the overall impact risks could have.
Review risks to your business regularly so you can make adjustments to reduce the chance of them occurring and their potential impact.
For example, if you are a retailer that does most of your business through your high-street shop, improve your website. That way, if people can’t get to your shop, you can sell your goods online and not lose income.
It may sound obvious, but consider both internal and external factors that may affect your business. If you’re a small business owner, you’re likely to be focused on the day-to-day running of your organisation. But as we have learned, business markets and the economy can change overnight. It’s essential to keep up to date on local and international news so you can adapt your business practices if required.
It may seem like shutting the stable door after the horse has bolted, but you need to review or implement a business continuity plan. An effective plan will help you get your business back up and running after an unplanned incident or event like we’re currently experiencing.
Putting a plan in place will help your business recover more quickly. The longer the downtime for your business, the larger your financial losses are likely to be. If you can restore your business functionality quickly, you can minimise any losses.
Supply chain management
Businesses will be still be managing the challenges coronavirus has brought in respect of buying goods and services. Many will have had to find replacement suppliers to maintain the continuity of their own services. This highlights the need to review sourcing strategy to build resilience into the supply chain.
Map out your supply chain so you can identify vulnerabilities. Note who your critical suppliers are and think about how you can reduce your reliance on them. For example, if you use one supplier to manufacture your products, could you split production between two? That way if one can’t fulfil your orders, you can switch to the other supplier.
Keep in close contact with your suppliers, so you get an early warning if they are experiencing difficulties. Then, you can take immediate action to reduce the impact on your business.
Review your contracts so you know what your rights are if a supplier can’t meet their obligations. You may also want to check that your suppliers have disaster recovery plans in place and whether they will adequately protect supply to your business.
Invest in technology
If you’re a small business owner dealing with the challenges of coronavirus, investing in technology may not be high on your priority list. However, having a system in place that lets you see your financial position in real time and helps you to make informed decisions is essential.
Accounting software is one option. It is relatively inexpensive and easy to implement. It will give you an overall view of how your business is performing and help you identify and resolve issues quickly.
Building resilience now will help your business survive the current crisis and respond effectively to any you may experience in the future. If you live in or near Crawley and you’d like some help to put a plan in place to protect your business, we can help. Book an appointment with one of our team of specialist accountants and tax advisors today.