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How To Power Up Your Business Recovery From The Coronavirus Pandemic

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COVID 19: Business Recovery Plan From Experts

After this Coronavirus pandemic, there will emerge winners and losers. To give your business a chance of not becoming just another casualty of this economic crisis, here are some steps from experts you can follow.

The Coronavirus crisis is causing such vast changes to business and life that it’s hard to identify disasters from opportunity when presented. An example of this is the British food delivery company Ocado, that had received an overwhelming amount of orders placed on their site at the onset of the crisis that it crashed their site, and had them believing that someone had hacked their site! This failure to respond nearly sent the company out of business as Ocado went from being a trusted brand leading the field in food delivery to missing out on millions of dollars of business.

Over in the USA, the economy looked to be in good shape at the outset of the crisis, with many companies experiencing a rise in orders and increased employment levels. However, once the crisis fully kicked off and life as we know it changed, many companies were slow to react, and, like Ocado, many missed out on solid business opportunities.

As every economist knows, a crisis will usually throw up a bunch of winners and losers, so the key to success and survival is an ability to adapt and respond to the new realities.

How to turn things around in the time of Coronavirus.

Your priority is to take a realistic overview of your current situation. This means identifying and acting on opportunities that have presented themselves as a result of the Coronavirus pandemic. You also need to take stock of your finances, your business strategy, organization, and your operational position.

This is a scary time for CEOs and business owners. It seems as if one false move could crash the company, yet failure to respond to a gap in the market could leave the way clear for your competitors. We have never been in this position before and although forecasters are predicting the future with monotonous regularity, nobody really knows what the future will bring.

How to make your company more resilient.

One thing is for sure. Now is the time to make your company more resilient so you can roll with the punches.
Your first step should be to stabilize cash and liquidity so you can create a stakeholder management plan from now on and for this, there are five key components.

  • Identify your options: is there a way to profit from the crisis? Can your company offer a service that helps people during this grueling time? You may find that your business has positioned itself to increase activity, so it is important to keep your head and identify whether you can expand in this time of crisis.
  • Stabilize and streamline your business. Ensure your company is as steadfast by removing added expenses or services that are nonessential. Put on hold your expansion plans for now and cancel moving to new premises and similar.
  • Work out your turnaround strategy: Calculate the options on paying back any loans and finance that you need to draw on to tide you over this tough time.
  • Decide on how to execute your turnaround strategy: Ensure that you can meet all the requirements of your turnaround strategy such as repayment of loans or business restructuring within a time frame. If you can’t execute, choose a new strategy.
  • Value realization: Before you borrow any finance, it is important to understand the risks and costs of each option, including any contingency plans you may have. This applies to whether you are aiming to simply weather the storm, or if you have a more proactive approach.

How to overcome financial difficulties now.

The crisis is certain to lead to a major recession, so you need to inspire confidence in stakeholders who may be fearful of losing their investments. Maintaining communication with stakeholders and keeping them informed of your plans will help to keep them onside.

You need to assess short term liquidity requirements and identify ways to add value to your company so that the stakeholders know you have a greater of minimizing risks to provide stability. By instilling confidence in your investors, you have more chance of keeping them onside throughout the undoubtedly rocky path ahead.

You also need to take a long hard look at the structure of your company and carry out corporate restructuring to make your business more sustainable. There are six key questions you should ask yourself.

  • The first question is the big one. You must be realistic in predicting whether you have enough liquidity to keep operating. If the answer is no, then you need to explore other options such as taking out loans or requesting more investment from your stakeholders.
  • You also need to look at the situation and assess your options. If something has gone wrong, do you know how to fix it?
  • It is important to maintain confidence with stakeholders and keep them fully informed of the situation so it is important to engage with them regularly. Even if the news is bad, it is important that they understand the position.
  • Work out your available options to decide which new capital structure is most sustainable and offers the best chances for success.
  • Implementing the new capital structure required from your stakeholders and investors may be one option you are considering. Again, it is important to ensure that your stakeholders are fully informed of the situation.
  • You need to monitor your business extremely carefully to ensure that it is fully supported through the recovery period.

Outside of requesting additional investment from stakeholders, there are some additional options available.

You can apply for government help in the form of PPP (Paycheck protection program loan) or the EIDL (Economic Injury Disaster Loan). These two government loans will help you sustain your workforce for 8 weeks and are open to all sizes of business.
Because the PPP is forgiven for wage payments, you are unlikely to need to repay this loan. This means that once the crisis is over, you should still have a workforce and you will not have had to pay them in the meantime for staying at home.

Applying for both PPP and EIDL may help you inject some liquidity into your current situation. This option is mainly targeted at small businesses but is available for companies with up to 500 employees.

You may find that making drastic changes to your organization will help reduce running costs that may not be obtainable in the future. For example, moving some of your call centers offshore is likely to reduce running costs and although you might not want to take this step now, it is certainly something worth considering for the future.
Convincing your stakeholders you have options for the future as part of your long term plan moving forward, will help sustain you throughout these difficult times.

How to manage insolvency caused by the COVID 19 Crisis

Undoubtedly there will be cases where the COVID 19 pandemic will cause businesses to become distressed, so if the worst happens you will need to handle the crisis by assessing the situation and creating a practical insolvency plan.
If this seems like the only option, you need to work with your stakeholders and advisors to identify the path or maximum value and the minimum of financial losses.
Check out the likelihood of impact and assess the risks of all the options available to you. Once you can create a detailed insolvency plan that optimizes your stakeholders’ positions, the less painful it is likely to be.

5 steps to manage insolvency:
  • For corporate businesses where the organization can be spread over a wide area, it is crucial to understand the extent of the problem.
  • Insolvency planning: Identify your options and decide whether you can take measures to avoid it or minimize the impact.
  • Commencing insolvency: once you understand what happens in a formal protection process you can start moving on with your plans. Your business lawyer will help you with insolvency and reconstruction plans.
  • How you implement the insolvency will make a difference in the value of the company. Find ways to maximize value on assets and property.
  • Once you have exited this formal process you can begin to make you way back to “normal”

What does the future hold?

Nobody can predict the future and because COVID 19 has affected companies on a global scale, any corporate business that relies on a worldwide supply chain could be facing long term damage.

The future may not be all bad. For corporate restaurant chains and entertainment providers, there is likely to be a boom in profits once everyone comes out of lockdown. That is as long as these businesses can continue to operate now and weather this storm.
In addition, tech companies are likely to prosper because of the distinct ways that people are working and will probably continue to work in the future.
You only have to look at the rise of Zoom during the current crisis to see that video conferencing is on the rise. Prior to the Coronavirus crisis, Zoom was servicing 10 million customers per day mainly from the business sector. Today with the rise in social isolation Zoom is providing 200 million people a day in many ways from online yoga to family get-togethers. This company has benefited from the crisis and has provided a great service as well.

It is important to remember that once life gets back on a more normal footing, people will still need to eat, to buy cars, buy insurance, to furnish their homes and carry out every other ordinary function so businesses will continue to flourish into the future.
There are bound to be some casualties but careful planning and a realistic approach to the crisis now will help you build steady foundations for the future.

Something Wasn't Clear?

Feel free to contact me, and I will be more than happy to answer all of your questions.

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Something Wasn't Clear?

Feel free to contact me, and I will be more than happy to answer all of your questions.