Strategies for Business Resilience
How to survive a crisis like COVID-19
COVID-19, has gone from being a largely unknown medical condition to one that threatens global economic growth.
Whether it is the coronavirus, fire or flood, the fact is if you are in business long enough you will almost certainly have to deal with an external impact on your business – bushfires, drought, GFC, SARS, 9/11, we’ve seen a few. The key is to react but not over-react.
We explore the impact on business and the importance of planning for setbacks beyond your control.
1. Business Continuity Planning
Business continuity planning is essential. It is the biggest part of business resilience, and is often referred to as a "Business Resilience Plan".
- Explore the potential end-to-end impact of the virus (or whatever the crisis may be) on your business
- Define risks and tolerances by product/service type
- Make informed decisions based on strategic assessments – labour, currency changes, costs of materials and logistics, potential disruptions and supply issues, demand variability.
- Where weaknesses exist, explore alternatives. Can your business reduce costs as demand falls? Can you increase production to take advantage of demand? Can you adjust procurement to take advantage of or protect against pricing fluctuations?
- Reduce debt and reassess projections for large investment hungry projects. You might delay a project or speed up time to market.
- Ensure that your team communicate changes they are seeing and develop a culture of initiative. Your frontline will hear and see impending changes well before management sees them.
- Engage with a professional. Aintree Group is offering Business Continuity Plans and assistance meetings if you are looking for professional help.
There are practical steps businesses should implement into their business plan. Some businesses make the mistake of not responding at all while others make too drastic a change.
An appropriate reaction might be to offload trading stock if it is going out of date soon. But it might be an over-reaction to dismiss staff, when a better idea might be to reduce their hours. Contingency plans should be set in place.
Try to have enough capital in reserve to see you though at least three months. Cashflow is critical in a crisis so it should form a central part of the recovery business plan.
For the businesses that can deal with external threats such as coronavirus, there are huge opportunities. More money can be made in volatile times compared to when things are stable. If you have a competitive advantage, exercise that advantage. Businesses with limited scale in impacted industries will struggle and some will come onto the market as tuck-in acquisitions. For others, their customers and suppliers will be open to change if they cannot trade consistently with demand. Opportunities could also arise, such as key staff leaving a competitor or rival businesses losing market share.
To exploit those possibilities, however, it is critical to have a sound business plan to ride out the current turbulence and then move into the next growth phase.
2. Establish Business-Wide Policies & Procedures
If everyone is operating on the same page, then it's easier to manage a crisis as a whole. And we mean a literal page - policies and procedures are no good if they only exist in your brain and people can't access them when needed.
In the case of coronavirus, many businesses suddenly found their offices empty and all employees working from home flung far across suburbs and cities. If your employees aren't able to be relatively self-sufficient by following procedures for their day-to-day work without needing constant guidance, that is going to be extremely difficult.
Obviously some procedures would have been written with face-to-face workplace conditions in mind. Procedures will likely need to be revised and adapted to the new situation (e.g. emailing documents rather than leaving on desk in-trays). However it is far easier to adapt existing policies and have your team be able to execute them, rather than write them completely from scratch in the heat of a crisis and expect everyone to know exactly how to execute.
In the case of coronavirus in particular protecting your employees and customers from the risk of infection is essential - even once the "immediate danger" of spreading infection is over. So you will need to introduce new policies and procedures to keep your employees, clients and families safe.
At Aintree Group we have already written hand and desk cleaning protocols, pre-meeting surveys and other procedures in preparation for returning to the office. All businesses will need a policy for handling employees who are ill and/ore who have been in contact with someone who has COVID-19.
It's not just coronavirus that highlights the need for good policies procedures. A disorganised business will not thrive in any crisis situation. Even if it's a crisis to you alone as the business owner - does your team know how to continue work (with quality and consistency) if you're not there?
3. Succession & Estate Planning
Speaking of you not being there...
When everything is going well, creating and maintaining a succession plan might not seem like a top priority. However, it is a critical element when thinking strategically about your business.
Without it, your business will be left vulnerable in the event of unexpected departures, employee retirement or partnerships that just don’t work out. In times of crisis, the likelihood that you might need a strong succession plan increases.
Succession planning allows you to identify the people within your organisation that are capable of stepping up and taking on big important roles. If a key member of your team leaves unexpectedly, a sudden scramble to search for candidates outside of the business won’t necessarily leave you with the best result. Nurture someone within the business, who knows it from the inside out.
You can’t possibly plan exactly for the future, but be prepared for a variety of outcomes. There are many crisis situations that unfortunately may mean you're unable to continue to run the business yourself, and you need to know it is falling into capable hands.
4. Use technology to keep your business flexible
It's 2020 and businesses should not be relying on paper. It's messy, slow, bad for the environment, hard to measure accuracy and consistency, easily lost or damaged and a nightmare to store.
Once again, coronavirus pushed a lot of businesses to move to remote working conditions. However there are other crisis situations that could have had the same result - a fire or flood in your office would have the same effect.
At Aintree Group we have long been advocates of using cloud-based technology. The benefits include automatic back-ups, increased productivity, being able to access data securely from anywhere, easy communication and collaboration, tracking data and workflow in real-time are irrefutable.
This is a case where prevention is easier than cure. It would seem that businesses who had already adopted cloud-based technology found it easier to transition to lockdown life during COVID-19. They weren't shopping for software in a rush, employees and management were already familiar with how to use it, and everything was already integrated within the procedures in the business. 7.
5. Strong Culture & Relationships
Relationships are always tested in a crisis, and if those relationships on rocky ground to begin with, you're starting out at a disadvantage.
If your employees, your clients and your suppliers believe in you and your business, they will remain more motivated and productive and be more willing to adapt to sudden changes. Use the policies and procedures established above to make sure everyone is on the same page and working towards a common goal.
A key element is to communicate clearly with all stakeholders. Tough decisions might have to be made, and you want the negative impact to be as small as possible.
While your business' survival through a crisis is a priority, don't forget the human feelings involved. Crisis situations leave people
feeling vulnerable and overwhelmed, and that doesn't always lead to strong decision-making.