For distribution to all GST clients
Friday, March 13th, 2020
Coronavirus: Strategies, guidance, and potential impact
We have heard a wide range of ideas, emotions, and degrees of concern regarding COVID-19 as a public health emergency. We will leave speculation on health risks to the medical professionals. Outside of these health risks (real, possible, or panic driven) your business is now facing very real financial risks.
Business Risk Level
Depending on industry, your business risk level ranges from mild to severe. Below, we’ve listed some categories to give you our thoughts on your potential business risk.
- Business to consumer firms (where clients must visit your establishment) – High potential business threat short, near, and intermediate term
- Business to consumer firms (where client can be served remotely) – Medium potential business threat short term and near term
- Business to business professional services – Medium potential business threat short and near term
- Construction – Mild potential threat short and near term, medium threat intermediate • Manufacturing – Mild potential threat short and near term, medium threat intermediate
- Retail – High potential business threat short, near, and intermediate term
- Technology – Mild potential threat short and near term, medium threat intermediate
So What Does All of This Mean?
For those of you with retail locations, and those that serve the consuming public in your offices, your short- and near-term threats are extremely high. Clients could elect to stay home, and we expect with the current shut down environment to see at least a several week lull in consumer spending which will have a short- and near-term impact to your business. Medium- and longer term threats exist though at this time we believe these threats are minimal as directly correlated to COVID-19. The medium- and longer-term threats are cash flow related as finances tighten with less clients purchasing in these establishments. This guidance can change should COVID- 19 spread dramatically and the general panic continues or worsens.
For those of you serving the public that can do so remotely, or without a reliance on clients to patronize your location, your short-term threats are primarily associated with the general shut down as ordered by Governor Hogan. In the current environment we would expect your new sales to slow in the short term. You also have potential risks associated with vendors, suppliers, payors, and partners. The severity of these risks will vary based upon their industry’s associated financial risk. Intermediate and longer-term risks are low absent empirically significant spreading of COVID-19.
Professional services firm with a B2B focus should also expect short term slowdowns in new client acquisitions, sales, and activity that leads to sales. Many of your clients will stay home (at least for a week or two) given the current environment. You also have the associated suppliers, payors and partners risk as detailed above. We would expect business to business activity to recover earlier than other segments that serve consumers.
Construction & Manufacturing face the lowest short- and near-term risks, though these firms could see a lengthening of the sales cycle based on the length of shut downs. Most of the short-term risks will be associate with your employees’ health, absenteeism, and your ability to staff your crews and your office. If you’re doing business with the Government you may be facing laying off employees. Nevertheless, construction likely won’t cease near, intermediate, and long term.
What You Should Be Doing?
- You should implement a policy around employee health. If someone is experiencing any of the symptoms of COVID-19 you should allow them to call in and take PTO. Even if they’re “certain” they’re just experiencing seasonal allergies they should stay home.**
- You should hang signs prominently around your office encouraging proper hygiene.
- You should immediately begin screening prospects and clients to determine if they have recently travelled outside of the Country.
- You should implement work from home policies if possible for your company/industry.
- You should post your policies in prominent areas where they can be reviewed by all employees, clients, and other visitors to your workplace.
- You should implement proactive office-store-worksite protocols (regular counter wipes, bathrooms, use of common refrigerators/microwaves, etc.).
- You should continue to recruit at all levels (this is important) ABR – Always Be Recruiting
- You should identify non-essential employees that you could lay off should the current “panic” state last past 2-3 weeks
- You should cease any new hiring
- You should make employees aware of the health policies and help them follow those policies for both themselves and your clients/prospects
** Those subject to MD Sick leave laws allow eligible staff to use that leave in addition to PTO, if a separate policy. Any employer over 50 employees in a 75-mile radius and subject to FMLA, ensure you have a process for employees to apply for and avail themselves of that benefit.
- You should hoard cash by reducing expenditures in anticipation of delayed reduced revenues. Do not undertake any cap expenses at this time from cash
- Consider if you can reduce owner draws
- You should curtail any unnecessary owner/partner/personal spending for at least 30 days
- If you do not have a line of credit for your business you should seek one (note: you should already have this)
- Delay payments to vendors and suppliers when possible.
- Eliminate discretionary bonuses in the current month, and possibly April
- Down time also good to review current contracts, leases, LOC’s etc. and renegotiate.
- Avoid long-term renewals, if possible.
- Eliminate or require pre-approval for OT, travel, and other discretionary expenditures.
- Utilize down time to plan
- Meet individually with your top 30 – Leverage technology and ‘Meet’ via face time, scheduled phone calls, skype, etc. have a clear purpose and agenda as you would with an in-person meeting.
- Expand your top 30
- Contact key prospective recruits and merger partners (ideally your response to this emergency will be another unique differentiator between your company and their current situation)
- Meet with informal sales partners (banks, suppliers, and other COIs)
- Use down time wisely
- Update your plans weekly. Consider changes each day/week and how those changes should impact your current strategies
- Promotion – Get word out to your clients/prospects that you are open for business. Inform them of modified procedures and of precautions you are taking to protect them and your team members, etc.
- Have an effective voicemail strategy when reaching out as you are looking for a call back, text, etc.
- Do NOT panic
- Don’t waste time worrying about all sorts of eventualities you cannot control
- Journal, use affirmations, take daily action to develop positive mindsets and solutions to this current financial emergency
- Contact our team for guidance, assistance, or to bounce ideas.