Business owners – Measures to Take in a Crisis:
Coronavirus has had a substantial effect on firms all around the world. As the crisis unfolds, how business owners choose to respond will be a make or break situation. So, we wanted to write up a few of the distinguishing features of companies’ that we have seen weather the storm successfully. Hopefully it will prove a good checklist, or at the very least, give you some pointers for standing a better chance should you need to.
There’s no avoiding it. A distinctive feature of enduring companies is the way their leaders manage a crisis. Impulsive actions and false optimism are unlikely to stand you in good stead for successfully navigating your ship out of difficult waters. Bold decisions and solid contingency plans are an absolute must. So face up to the situation and be sure to think about what measures you can take to steady the sails. Recovery takes time and no one knows how long it will take! That being the case, the more adaptable and flexible businesses are likely to fare best. We only need to hark back to Darwin to see that same old theory of ‘Survival of the fittest’ at play. Survivors, he stated, are not the strongest or the most intelligent, but the most adaptable to change.
More efficient tax models
During times of crisis, more agile tax models are needed. So, it’s important that business owners take stock of ways they can minimise their liabilities, obtain any available refunds and reduce payments. While it is always a good idea to ensure your business is tax efficient, this measure will certainly come into its own during a crisis. Cash-Flow will be paramount and the Government have shown they are willing to help businesses through.
Supply chain management
Be aware of how far reaching the crisis is and the knock on effect across your business. The ripple effects of the COVID-19 pandemic, for example, have caused widespread supply chain disruption or many. Part of successful business planning is to implement measures to mitigate such risk. So, if you operate on an international scale, you should be thinking about identifying alternative supply chain scenarios so that ‘business as usual’ can remain as largely unaffected as possible.
During a crisis, business owners should expect to see people’s spending habits change. If we take the current COVID-19 breakout by way of example, even where businesses are not directly affected, the lockdown situation is causing people to change their spending habits en-masse. The whole playing field can change during a crisis so keep an eye out for patterns and look for opportunity to alter an offering to suit the current climate.
Crisis management and response
Crises usually come unannounced and unexpected. As such, it’s important to recognise that your existing business continuity plans may not be adequate for the situation you find yourself in. If this is the case, do not hesitate to rethink them; and adjust according to pace and magnitude of the situation. As in any situation, effective communication will be key. So, it is essential that you develop incident management and scenario plans specific to the crisis you find yourself in. Ensure you regularly update important stakeholders – and don’t make the mistake of thinking that this category doesn’t include your employees. Tell them what is going on so that they stand a chance of pulling together with you rather than blindly pulling apart!
Reassess capital spending
During this time of crisis, it is important to look closely at your spending plans. You will need to assess whether they are still sensible (or in fact needed) in the current situation. It could well be that there is no reason to change plans! That being the case, suddenly making dramatic changes may well unnecessarily rock the boat, or even slow down future recovery. Making changes prematurely could well demotivate and/or panic staff. So, it’s important that decisions are based on solid analysis and in the correct timeframe.
The changing situation may even present opportunities for your plans to accelerate. What’s important is that any action you take follows proper deliberation. Knee-jerk reactions often damage long-term prospects. So be sure to think through your plans carefully, and remember that people will still be watching how you handle a crisis. Good will goes a long way – and reputation remains just as important when times are hard, as when they are not!
As always, if you would like to speak to an adviser, please do call us on 01243 767 469. Alternatively, you can email us from our contact page, and an adviser will be in touch.
Written by Steve Burns
Steve is a chartered financial planner who has been with Lewis Brownlee for over 20 years, who now heads up Lewis Brownlee Financial Services. Under his directorship, the firm has established itself as a specialist provider of professional, informed and impartial advice.