After months of strict lockdown measures that crippled the global economy, many businesses are slowly opening up again.
However, things are not going back to the way they were before the pandemic, at least not in the near future.
In the wake of loosening restrictions, different countries and industries will follow different reopening schedules based on the progress of the virus.
The COVID-19 lockdowns were a defining event and one that has left a strong mark on economies, societies, and consumers.
Customers have been under lockdown for months, which altered their habits that won’t change for a while. Businesses need to understand these newly formed customer behaviours and adapt their offerings accordingly.
The retail, leisure, and hospitality sectors must quickly learn the effects on household purchasing power and consumer confidence. The degree to which consumers believe in a fast-paced recovery will determine whether they choose to save or spend.
This will, in turn, impact consumer habits and expectations.
No one can say with any degree of certainty how quickly demand will return. How will health guidelines and regulations affect supply chains?
How has the pandemic affected consumer confidence?
Renewing Not Reopening
Businesses are understandably eager to get back up and running, but navigating the current health and economic landscape poses many challenges.
The world has changed, and so has the behaviour of employees and customers alike.
What makes this restart difficult is that businesses have to plan for contingencies. As a result, businesses need to reopen with added flexibility to quickly respond to changing market conditions.
Only agile businesses that can quickly alter their entire business operations at a moment’s notice will win.
We put together this guide to help businesses successfully manage the challenging process of restarting in a post-COVID lockdown environment.
Businesses that can react and adapt quickly to unforeseen challenges will come out on top. In order to remain resilient, organisations have to drastically speed up their decision-making process.
This means conducting possible scenarios and identifying which appropriate actions need to be taken in each case. Carrying out risk-specific scenarios will improve your teams’ decision-making processes.
Safety guidelines may differ from country to country, and state to state. However, there are measures which businesses should adopt regardless of their location.
Let’s look at some health guidelines every business should follow to provide a “COVID-19 safe work environment.”
Provide a Safe Environment for Customers
The basic principles of hygiene and social distancing continue to apply in a post-lockdown world.
If your business relies heavily on foot traffic, then limit the number of customers on the premises with a special focus on areas that are likely to become congested. If possible, use the outside of your premises for queuing.
Install physical barriers between your staff and customers and communicate health protocols verbally and through signage.
Finally, disinfect work surfaces and busy spaces on a regular basis.
Workspaces will have to be cleaned more regularly, with a strong focus on public or “high touch” areas such as:
- Door handles
Apart from frequent cleaning, your business should also install hand sanitiser stations throughout the workplace.
Proactively ask for feedback from staff members and let them voice their concerns.
Prepare a brief for your employees at the start of their shifts with a Q&A session to make sure that everyone feels comfortable moving forward.
Regular Wellness Checks
Consider carrying out regular wellness checks with your staff. Many businesses and institutions around the world are performing temperature scans at the entrance of buildings as a way of slowing the spread of COVID-19.
A large percentage of the global workforce is stressed and uncertain about their personal job security.
A measure that will certainly improve the mental health of your staff is easing your sick leave policy, which will discourage people from coming to work if they feel unwell.
Make sure that you’ve communicated to your employees the importance of staying home if they feel under the weather. This way they have peace of mind knowing that they can work remotely and still have a job without having to justify anything.
Also, your concern for staff should go beyond work-related issues. If you are able to, offer mental health support programs to help employees who are going through a great deal of stress.
Take an interest in their lives and let them know that they can come to you and discuss their problems. The pandemic has left many people scared and they should not feel alone.
Redesign the density of your offices and limit physical contact to ensure that employees feel comfortable going back to work.
One of the ways of achieving this is by separating employees who must be physically present from those who can work from home.
Also, see if you can lower the number of employees in the workplace by switching up their working hours using shift rotations.
Businesses need to further strengthen relationships with their customers.
The focus should be on making the relationship more personal and less transactional. It should also recognise the customer’s particular position and find ways to improve it.
Businesses that decide to have an honest conversation with customers and learn about their challenges, opportunities, and goals will come back stronger.
Consider whether price adjustment will prompt your customers to buy.
This is a delicate task, which needs to be executed strategically. The goal is to make it easier for customers to make purchases while also creating business conditions that will spur a return in spending.
However, when coming up with a discount policy, it’s critically important to avoid lowering the prices too much because this can have a negative effect on your business.
Securing sales from your most important clients is an absolute priority in a volatile post-COVID lockdown market.
If they are experiencing their own cash flow issues, offer to extend payment deadlines or provide advantageous payment terms. However, when deciding whether to grant deadline extensions consider what the cash flow ramifications are to your business.
Open Line of Communication
It’s likely that your business has had to adapt to survive the lockdown measures meant to suppress the spread of the coronavirus.
Inform your customers regularly about health protocols you’ve implemented, as well as any changes related to your business.
Set up social media pages for your business, if you haven’t already, to share information to your audience as well.
A breakdown in supply chains can have irreversible damage to your business. Unfortunately, it’s a very real possibility in the current business environment.
Not only will your reputation suffer but your business might face financial penalties. If the disruptions are prolonged, you risk being sued for breach of contract.
It is critical that you understand your supplier’s ability to operate across the supply chain.
Therefore, planning proactively is one of the most important steps to avoid delayed production or deliveries to your customers.
Identify Critical Suppliers
Create a list of your tier-one suppliers and find the most effective alternative suppliers (in terms of speed and cost) that can jump in and replace them should the need arise.
Don’t forget that logistics providers play an essential role in maintaining the flow of products.
Therefore, keep an open line of communication with logistics companies and have a contingency plan in place if the supply chain breaks.
In some sectors, there will certainly be suppliers that are overstocked as a result of protective measures they took in the wake of the pandemic. This could also be due to a drop in sales as a result of the lockdown.
If this is the case with your suppliers, find out if they are offering discounts on bulk purchases of their current inventory.
It is highly unlikely that there will be a global coordination effort to lift lockdowns, placing businesses dependent on cross-border supply chains in a precarious position.
Therefore, you have to diligently follow the pace at which lockdown measures are being lifted in the country in which your supplier is operating. This also entails tracking the spread of COVID-19 in the country because a spike in infection rates could lead to another round of lockdown measures.
Maintain a Strong Relationship
A steady stream of accurate information from suppliers is the best option you have in avoiding unforeseen disruptions.
Is it likely that your suppliers would open up and tell you about the difficulties they’re experiencing? If not, then what can you do to build trust with them so that you can get relevant data on time?
As suppliers restart their operations, it’s likely that they have a sizable backlog of orders. A strong collaborative relationship will help put your business at the front of the line.
This means offering solutions to help your supplier prioritise your business. For example, organising transportation instead of relying on the supplier to make deliveries.
If you’re able, consider paying ahead of schedule to obtain products that are in stock before others. You can either do this via your own cash flow or Supply Chain Finance, which gives your supplier the option of taking payment earlier from your lender.
Try to include monitoring procedures in your company that can identify any potential problems facing your suppliers. Here are some of the most important warning signs that could indicate that a business is experiencing critical operational problems:
- If your supplier requests pre-payments or accelerated payments, then this could indicate cash flow problems.
- An unforeseen increase in prices or requests to renegotiate terms could also indicate cash flow issues.
- Poor communication could be a sign of a supplier deliberately avoiding contact. This is especially worrying if they are unresponsive after repeated enquiries.
- Constant staff changes could indicate that employees are unhappy with working conditions at the company, or that your business is simply not a priority.
- Failure to deliver goods in accordance with agreed-upon terms and schedule could be a symptom of structural problems. It’s important to uncover the causes of non-delivery as soon as possible.
- Keep your ears out for any rumours circulating about your suppliers. Try to corroborate what you hear by looking into more trustworthy sources, like contacts in the company or other customers.
Be sure to monitor for any of these warning signs, so in the event that they appear, you’ll be able to react quickly.
There are several specific actions businesses can take to solidify the supplier ecosystem and limit the harmful effects of possible disruptions.
Corporate Resolution Planning
Consider including a mechanism in your contract (if possible) which obliges your most important suppliers to alert you of particular financial difficulties they may experience.
These terms ensure that you are notified early on and that you play a part in the resolution plans. This will prioritise your company and strengthen your position with suppliers.
Building Up Inventory
Consider whether you can purchase supplies onshore to avoid cross-suppliers altogether. Is it possible to stockpile products to mitigate the effects of short-term disruption?
While building up your inventory is only a temporary buffer against supply disruptions, it does buy you time to find alternative suppliers.
Incentives for Businesses
The Australian Government has implemented initiatives in March 2020 to give small businesses a much-needed boost.
The Federal Government has introduced an instant asset write-off, which allows businesses with an annual turnover of less than $500 million to claim immediate deductions for asset purchases such as machinery, office equipment, and vehicles. This measure has recently been extended until the end of the 2020 calendar year.
Before you decide to take advantage of the instant asset write-off, speak to a tax professional to determine how the asset will benefit your business. If you are advised that there is a benefit, but you don’t have the cash flow to purchase the asset, it is best to contact us now in order to understand your finance options.
If you want to purchase an asset prior to End of Financial Year, you need to get your finance in place now to avoid lender delays, as this is a busy time of year for all.
The other incentive is the Backing Business Investment- Accelerated Depreciation designed to encourage investment and growth of small businesses.
Accelerated Depreciation is a method of depreciation used for tax purposes that allows businesses to deduct the cost of assets early on in their use rather than over the standard effective life of the asset.
Only assets that are new and haven’t been held by another entity are eligible.
The incentive is in place until 30/06/2021 and offers benefits to Australian companies across industries.
Again, before you decide to take advantage of this tax initiative, speak to a tax professional to determine whether this will complement your tax strategy.
Aviator Advisory is here to support you from a financial standpoint as you restart your business in a volatile post-COVID world.
If you have already mapped out a way to reopen but you need financial help, get in touch with us now and learn about your finance options.
Disclaimer: The information provided herein is for general information purposes only and does not constitute specific advice. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific advice should be obtained from a suitably qualified professional before adopting any investment/financial strategy.