COVID-19: When the Fog Lifts
There has been a great deal of focus placed on the immediate, harmful impact of COVID-19 on Canadian businesses. While it is essential that business owners tackle the direct consequences, it is equally important to understand the longer-term implications of today’s decisions on your business. Assessing both the immediate and longer-term implications of your choices will better prepare your business for when this crisis passes.
The first step is to develop a plan to stabilize and protect your business in the wake of massive changes including maintaining the ability to operate, adjusting to supply and demand fluctuations, and managing your business’ liquidity.
Create a crisis team
Manage your risk
Manage liquidity and stress test
|Develop or revise your strategic plan|
The longer term
As important as the short-term stabilization plan is, it is just as imperative to look beyond the current crisis to assess the implications of today’s plan on your business, both temporary and permanent.
Perhaps most importantly, determining demand implications (revenue) will be challenging. What are the lasting effects of COVID-19? Will revenue declines in the immediate future be offset by pent up demand as business activity returns to “normal”? Or, will those declines be permanent in the current fiscal year, and perhaps beyond as consumer habits shift? At some point, deferred or new obligations will have to be addressed considering prevailing market conditions. Robust cash and operating models should be created for different demand scenarios and short-and long-term plans. Longer term financial arrangements, either through an informal out-of-court process or a formal court-assisted process using restructuring statutes may need to be implemented.
Lessons learned and silver linings found?
COVID-19 will no doubt leave a long-lasting mark on both the Canadian and global economy. What lessons can be learned from this unparalleled situation and will there be new opportunities to enhance future profitability? Questions to ask:
- Does your business have an agile, robust business continuity plan?
- How developed is your cyber security environment? Do you have adequate insurance and contingency plans in the event of a cyberattack?
- Can remote working arrangements become a more permanent part of your business plan, thereby reducing fixed overhead costs?
- Have new customers or markets opened as a result of changing demand for your existing products or changes to the competitive landscape?
- Can you produce new products using existing equipment to improve asset efficiencies?
- Can technology replace current workflow processes and methods, creating new efficiencies?
- Can e-commerce play a more significant role to add to your business’ overall profitability?
Private businesses are the engine of the Canadian economy. While the immediate challenges presented by COVID-19 are immense, entrepreneurs by their nature are courageous and resilient. We encourage you to plan for and think ahead to the future. The fog will lift, and brighter days will follow.
Your Fuller Landau advisor is available to help. You can also visit our COVID-19 Resources hub for more information on Canadian and US government programs as well as helpful information for business owners.
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