How Can SMEs Prepare For The Impact of the Coronavirus?
The coronavirus outbreak has affected thousands of people globally. Furthermore, we have seen the impact of the coronavirus on the global economy over the past few weeks. The focus of this article is on how SMEs can prepare for the potential impact of the virus on their business activity.
While larger companies may be able to weather the negative economic consequences, SMEs may find it more challenging and therefore need to prepare to ensure that they can continue to run their businesses in the event of an economic slowdown. Every industry will deal with the impact of the virus differently, however, all businesses need to prepare.
Before we explore some of the ways that SMEs can prepare, we'd like to state that we believe the world will get through this period. Let's stay positive and help those around us.
Below we list some ways that SMEs can be better prepared.
1. Create a contingency plan
Some key questions:
What is your contingency plan if the government requires that businesses close for a period to contain the virus?
If there is a lockdown in your region/ country, is your business able to run with employees working remotely?
Can you serve your clients remotely?
Creating a contingency plan is the first key step. Although this is more challenging in certain industries relative to others, it remains an important consideration.
In preparation for the possibility of a lockdown happening, we would recommend that companies test their remote working capability for one day to determine how their teams function and whether they can still service their clients. Once tested, do a thorough debrief to identify any issues and work on getting those resolved.
2. Mitigate potential supply chain disruptions
Several organisations may experience disruptions to their supply chains. This includes sick employees in their businesses as well as in their supplier businesses, potentially reducing the outpuom suppliers. Additionally, some companies may find it increasingly challenging to source their raw materials to produce their products. How can you mitigate the impact of potential supply disruptions?
If you have the capacity to do so, buy raw materials in bulk.
Be upfront and transparent with buyers regarding potential delays to your products.
Think carefully about how you can source additional staff if existing staff members are unable to be at work.
Diversify your supplier base to avoid dependency on one particular supplier.
3. Carefully consider how to protect your revenue
Offer incentives for clients to move to annual plans or recurring revenue models.
Consider offering discounts for prepayment of future spend (for example, offer discounted gift cards).
Assuming you have the capacity to do so, consider extending payment terms for clients who may find it challenging to pay during this time.
Finally, to all consumers and large businesses, continue to support small businesses. They need your backing during this time.
Boraine Consulting assists SMMEs with a full suite of accounting, tax and consulting services. Our focus is on improving the sustainability of SMMEs through financial literacy and empowering SMMEs with tools and information to make sound financial decisions about their businesses.
If you’d like a consultation, contact us at firstname.lastname@example.org
Additionally, click here for a free health check of your business.