We are facing an unprecedented event in at least our lifetimes with the spread of the coronavirus around the world. As efforts to control the virus continue, we have been asked to minimize our movements not only locally but throughout the world. Who would have ever imagined this !? Essential services remain open but almost everything else has halted. The long-term health risks are yet to be determined and the impact on the world economy will follow. The focus of this article is to outline the likely impact on businesses locally and some suggestions for what we might do to address them.
Control the Controllable
What is under our control is how we manage our businesses under these circumstances. We cannot manage the time or severity of this event but we can manage how to take stock of our businesses while this is taking place. The three key data points for our businesses are:
- What are our current reserves in cash and capital ? This determines how long we can pay the bills and how much capital we have to borrow against.
- What is our current spending and then what is our bare minimum required spending ?
- How long is the business viable ?
- Divide the cash by the spending / week to determine how many weeks your cash will allow you to operate.
- Divide your capital by your spending / week to determine how much that borrowing will allow you to operate.
Armed with this information, you can make decisions about staffing, spending and borrowing that will give you advance warning of how much your business is at risk. Then:
- Monitor how long it will be before your business will be allowed to operate by following the coronavirus plans by the governments for returning to work. Based on what we know from China, 3 months should be expected as a minimum.
- Contact your lenders in advance about your current situation and future prospects for making payments. They will appreciate advanced notice and may work with you to ease your payments.
- Closely follow the government bailout program for the coronavirus pandemic to determine how much relief you can expect from it. Note: as I write this, the Senate is voting on approval of their plan so this will likely change somewhat before final approval and implementation.
- Make the hard decisions as early as you can about minimizing your expenses in order to improve the viability of your business.
- Remain flexible – three things can change everything
- The length and severity of the virus
- How long it will take to put a treatment in place
- The government’s response to the difficult tradeoff between loss of life and loss of a future economy.
More than a glimmer of hope
As a nation and a world, we have been through many hardships on a much greater scale than this and survived and thrived. The way information flows today is so much faster than ever before and that can lead to fear, but it also can lead to rapid solutions. From this threat, we will see the world come together in a way we never thought possible. Mankind is wired to survive – you will see that in the coming months.
SCORE is a resource you can draw upon during this time to help you to work through difficult business decisions at no cost to you. It is made up of experienced successful businesspeople who volunteer their time just for times like these. You can draw on the SCORE resources by requesting mentoring at www.westmoreland.score.org. Our organization is nationwide and our local chapter maintains an offices in Altonna, Eire, Latrobe,and Oil City..