Did you know that Coronavirus, aka COVID-19, is actually called SARS-CoV-2 in the scientific world? Well, that is true: the SARS stands for Severe Acute Respiratory Syndrome, ‘Co’ stands for ‘Corona’ and, consequently ‘V’ - for Virus (not for ‘vendetta’ this time). However, what you truly might have not been aware of, is that the current one is the second outbreak of the virus, the first one starting back in 2002 with the last cases registered in May 2004. In the next months of the same year, all the countries were declared virus-free, a handful of them albeit stating that some biosafety concerns remain.
The way the virus behaved and spread in 2002-2004 is different from what we have now, for various reasons. Plenty of countries in Asia were affected, with fewer cases in Europe and the Americas. In the first 9 months, the UK registered 4 diseased and no fatal outcomes. In the same time, the world registered a total of 8.1 thousand cases and a 9.6% case fatality ratio. Back then, we did not have the quarantine, the #stayhome, nor the unfortunate panic. Some of us were not even aware of that outbreak. Regardless, the global economic loss was estimated to US $40 billion in 2003 only.
Therefore, what should we take into consideration now to minimise the possible consequences? We at Global Database have done our research and combined it with our own experience to come up with some valuable advice, sharing with you some of the main steps to be taken for a smoother comeback.
Business correlation with COVID-19 in brief
Unfortunately, there is no such thing as a detached crisis and at all times consequences have affected more or less some of the closest fields. While falling under that same rule, the current outbreak keeps its peculiarity given by the uncertainty of its future development (or the lack thereof) on both the short- and long-run, as well as by the speed of expansion. These conditions are augmented by the lack of hand-on experience of many a business’ management and executive boards to handle these kinds of situations.
In 2018, China’s share of global exports was almost 13%. With manufacturing or delivery processes of solely this country stopped, there may be massive disruptions of supply chains. Not to speak about a halt in manufacturing and logistics in many other countries as well. Although the overall impact on the world economy is hard to estimate, some major institutions did react to the events’ evolution. In this context, the International Monetary Fund has lowered its global growth forecast, and various others have issued their own estimates and scenarios for possible short and mid-term evolution of the outbreak and its direct impact on businesses.
Keeping a 360-degree view of the situation and understanding that the virus itself is only one risk among plenty of others that it brings along, is vital for any business. We at Global Database have compiled a list of key points you should look into during this challenging period:
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Use scenario analysis
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Take care of your supply chain
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Keep your finger on the pulse
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Explore possibilities to get help
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Keep an eye on your liquidity
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Review your stocks
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Analyse labour costs growth probability
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Clear up policies and protocols
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Divide to stay stronger
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Be prepared for changes in habits
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Never stop communicating
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Look for opportunities
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Use scenario analysis
Using scenario analysis is a common practice for businesses, especially those operating on an international level with both offices and stakeholders located in different countries or regions. However, now is the time to have a set of in-depth scenarios and well-outlined crisis planning. You should also do your best to have the latter stress-tested. Identify your critical sensitivities, weak points, while continuously being aware of the up-to-the-minute development of all fields that might have a direct or indirect impact on your activity. With all the uncertainty and the multitude of unknown factors related to the Coronavirus, business continuity plans and different tested scenarios become crucial for any company. The speed the outbreak is developing with should have already convinced you how important it is to have the latest and most accurate data coming from reliable sources to base your planning on.
The worst-case scenario, however, should be reasonable. It’s not the end of the world, after all.
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Take care of your supply chain
Don’t think that you and your company are not affected if your business partners and, especially suppliers are not, judging by the location thereof. Consider that their activity and business can be influenced by their own chain of business partners as well as the stakeholders of the latter. E.g., if the provider of raw materials of your supplier stops its activity, you will either have to pay a higher price, thus increasing your costs of production or sales, or you’d have to diminish the quantity of your output, which would affect your clients. In today’s conditions, it may be really hard to assess your risks from this perspective. Yet it is paramount that you do your best to estimate and hence foresee the impact of all known business relationships for your company.
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Keep your finger on the pulse
Well-thought decisions may never be successful when based on outdated information. Having some of the most accurate data as well as continuous access to up-to-the-minute trustworthy sources may be crucial for many. The more stakeholders your business has, the more important this factor is for it to be prepared for any event occurring on local and/or international arena.
Company intelligence directories are those who may well help you with that aspect. For example, Global Database provides detailed and structured information on over 70 million companies worldwide. The ease to explore it is assured by the advanced segmentation tools, which allow filtering businesses by location, type of activity and other criteria, as well as searching by the name of each company you’re interested in - to get thorough insights on its current situation or to perform a due diligence analysis.
Data sources and their expected flows should have an important role in your crisis planning.
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Explore possibilities to get help...
...while you can. Various countries offer different types of incentives and loans to businesses, regardless of size. State, federal or government assistance is aimed at helping companies during these difficult times. However, these resources are not limitless. Depending on the course of the outbreak, you may later not have the chance to receive that aid. Especially if your business provides products that may be a priority now or during the recovery, you should look into these opportunities and fairly benefit of those that would keep your company as well as local economy afloat.
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Keep an eye on your liquidity
Every businessman knows the importance of liquidity, especially during crises. As soon as you assess the current state of your stakeholders, you better give yet another glance at your own cash flows. If your cash flows are assured for the next 3 months or so (depending on the specificity of your product), you’re good. However, don’t forget to keep an eye on your inflows, as some of them may not be honoured in time.
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Review your stocks
If you have already acquired raw materials or products, which have been shipped from countries where the outbreak has reached higher levels and imports from which are delayed or discontinued, you may have to consider that as a loss. In the best-case scenarios, you may have your products delivered to your disposal, although there is no guarantee that when this happens the demand for them will still be as high as at the moment of ordering. Or you may get compensation from your Government. But in the worst case these products may be stuck in the customs or somewhere in docks and you may not get them any time soon or at all. Regardless of which would be the case, you doubtlessly have to pay for these goods, resulting in eventual liquidity issues. Estimating your possibilities versus your obligations to business partners is yet another key-point you should consider for crisis planning.
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Analyse labour costs growth probability
If your company or any of your stakeholders outsource to countries with cheaper labour force, you may consider starting to track the evolution of the outbreak in the countries where these human resources are located. The worse the situation gets locally, the fewer skilled employees might be available at the same cost. This might result in increases in the cost of labour. Yet again, even if you don’t outsource, your business partners might well do that. If those partners are suppliers, for you it may result in higher costs. If it is your clients we are talking about, they may cut their expenses by reducing, postponing or cancelling purchases from you, eventually leading to smaller revenues for your company.
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Clear up policies and protocols
The human resource factor has both its strengths and vulnerabilities. The latter results in risks for your business, and clearing up the ways things shall be taken care of is paramount to a more stable activity. Do you have protocols regarding situations where one or more of your employees are quarantined? Do you have employees who are located in areas with high contamination risks or those areas where there are strict limitations to travelling or moving around, that would impede your employees from doing their jobs? If you have employees that, on a usual basis, would be hard yet probable to replace, you should consider that in the current conditions these employees may be impossible to replace. Hence the need to examine all these clauses as part of your crisis planning.
Make sure you don’t miss any legal implications: personnel-related as well as all stakeholders-related. These might involve taxes, travel or other legal aspects that might affect their and hence the business’ operational activity.
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Divide to stay stronger
Offices that cannot afford to allow employees to work from home should try splitting either shifts or dividing teams in different locations, in smaller groups. For example, if you have teams working in open-space offices, separate them to different locations, to work in small groups, reducing the levels of human interactions. In such a way, if one group goes to quarantine, others would still be and feel safe, and keep the business working. In the case you have equipment involved that would impede you from separating teams by locations, you may try to do so in shifts while assuring a thorough cleaning and ventilation of working spaces.
Someone said that the COVID pandemic is the time when you can save the world by sitting home in your pyjamas. It is also the case to keep your business strong while dividing your human resources.
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Be prepared for changes in habits
Digitally transforming our homes and workplaces has become imperative under the current conditions, and patterns have changed. But have you given it a thought whether you’re going back to your usual business model once the quarantines are over? Do you think that this pattern helps you cut costs as well as improves employees’ time management and their ability and eagerness to work due to no commute time? Something to think about and take a decision accordingly, as now you get the real opportunity to estimate the cost-efficiency of having your employees work from home.
While supporting the technical part of remote work, you should make sure that you have the necessary bandwidth that would allow that, as well as the ability to have entire teams online concurrently, in case you need them. Besides, do not underestimate the risks, especially those that regard cybersecurity.
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Never stop communicating
Communication is key. Do not stop communicating with your stakeholders, your employees included. It is very likely that you’d be willing to know the concerns of your business partners, be it suppliers or clients, to assess your own situation. Similarly, all your stakeholders might be somewhat anxious about how things are going for you. Keeping them informed and continuously communicating is key to achieving both - maintaining sound business relationships and avoiding panic.
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Look for opportunities
Luckily or not, where one loses, someone else wins. During any crisis, it is the same. While some businesses have to suffer, others get the most favourable time to flourish. And we do not mean by this that, if you have the chance, you should rip-off others while they are suffering. On the contrary, we believe this is the best time for innovation. Maybe you’ve always had an idea, the development of which has not been a priority for you in routine conditions. Maybe you do have a product or service on tap that was not as popular but now is in high demand. This may also be the time to set a solid base for future relations. During the erratic activity of your competitors, you may show as the most reliable partner, and that is something that will hold your business alive in the long-run.
To sum up...
This article is intended to articulate some of the core matters you should think about today so that tomorrow does not get gloomy. It should not be perceived as a warning nor a forecast, but just a list of ideas to consider while structuring your strategic planning for the nearest future.
Over 20 centuries ago, Plato said that ‘our need will be the real creator’. Nowadays, that has been translated to ‘necessity is the mother of creation’, and the pandemic-related evolution of events is yet another proof of this statement. The need for social isolation for an unknown period of time, while keeping the companies and national economies worldwide alive has determined business leaders to look into new ways to manage their resources, especially human resources, or to experiment with those that seemed useless or impossible.
Fast-tracking digital transformation, agile crisis response capability and accurate data are all imperative today. Our advice is to make sure you estimate all the risks objectively and then understand whether these risks may be mitigated and if not - how can you better prepare for them. Yet again, if there are risks, there are opportunities, so may this be the best time for your company?
