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5 Steps to Save Your Failing Business amid COVID-19!
According to one survey conducted by Veem, 27% of businesses expect to experience average to the unreasonable impact of the coronavirus pandemic on their revenue, while 30% expect it to have small to massive impact on their supply chain. However, 52% of businesses are taking actions to tackle the economic crisis, for example, increment in pricing, switching suppliers, cutting operating costs while putting the best effort to maintain positive cash flow.
Small to medium-sized businesses are getting affected disproportionately due to this global pandemic, and making cognitive decisions and taking effective measures without panic could be the best way for you to save your failing business.
Before we discuss the global impacts, in brief, let’s take a look at these shocking stats.
According to the Bureau of Labor Statistics, 701,000 people lost their jobs in March, surpassing the estimation – 100,000.
10 million Americans filed for unemployment insurance in just the last two weeks of March.
The Impact of COVID-19 on Businesses
With the effects of lockdown for maintaining social distance, employees are unable to work, resulting in a shortage of resources to meet operational requirements.
Due to supply chain disruptions, many companies have lost huge business, shops are closed, citizens are unable to make purchases (other than essentials); all of these are resulting in an economic crisis.
As B2C and B2B companies are struggling to fulfill customer needs, a new wave of innovation in commerce has started to form.
The global crisis caused due to the rapid and widespread COVID-19 is changing our behaviors and attitudes as citizens, customers, employees, business owners.
Though the current times are tough for businesses to survive, there are solutions to tackle most business challenges.
5 Steps to Save Your Falling Business:
1. Re-assess your crisis management and business continuity plans
Most companies have crisis management and continuity plans in place, and some might also have plans to tackle pandemics too. However, quite often, the reality is way different than the expectations.
For instance, one organization in Asia has reserved a European city as a part of its pandemic plan, specifically to evacuate employees and their families. But soon after the spread of coronavirus, traveling was suspended between continents and even countries.
You need to produce comprehensive plans and tailor them according to the different challenges you face. For example, find out if you have sufficient technology to implement the ‘work from home’ concept efficiently. Also, you must;
- Determine the effects (both positive and negative) of acquiring business process outsourcing
- Update employee travel policies, terms, and conditions.
- Improve communication channels within your company and be in regular contact with clients, customers, suppliers, partners, etc.
- Take measures to ensure a secure and uninterrupted flow of crucial information amid the crisis.
2. Review contracts and prepare for dealing with contractual risks
Find out how the coronavirus pandemic, in any way, will make you unable to fulfill contractual obligations and know more about the rights you might have in case the other party becomes unable to do the same.
You need to consider;
- If the effects of COVID-19 has made contractual obligations impossible for you to fulfill.
- If you are obliged to notify about delays, suspension or termination of a contract, Force Majeure, etc.
- If there are risks of performance bonds and guarantees to be called on in case of contract breach owing to any consequences of coronavirus.
- If failing to fulfill one contract will have an impact on other agreements.
- How you can deal with insolvencies in the supply chain. You may look for other suppliers temporarily or consider a renegotiation of commercial contracts.
- Have you included – no oral medication, no waiver, and other essential provisions on contacts?
- Have you properly documented alternative arrangements in contacts?
3. Haven’t you considered coverage plans yet? It’s time do it now
Find whether you can claim the loss of business under any of the insurance policies already purchased.
Look into the existing business insurance you have in place, such as credit insurance and/or business interruption insurance. For example, you may claim for loss of use of your company premises due to risks of virus-spread or lockdown and payment protection in case some debtors become unable to make payments to you.
Be strictly in compliance with what you are obliged to. Obligations such as, when and how to notify about your loss to your broker or/and insurance agency.
Discuss with your insurers if they can provide you cover in advance, especially when you are expecting a massive shortage of human resources, or you may need to repatriate a large number of employees soon.
At last, if you know your insurance policy can cover some (if not total) loss of business, but still you are struggling to claim, you may consider getting help from a lawyer.
4. Scenario analysis is a must
With growing market uncertainties and predictions about long-term consequences of COVID-19 being harsh, scenario analysis and planning becomes essential for your business to test if it is prepared for the future or not.
- How worst the scenarios can become in the future and does your business have appropriate plans to cope with the same?
- What could be the impact of the coronavirus pandemic on your business’s financial performance and health in the long run?
- Ask your finance and accounting team to highlight critical challenges your business is facing to reserve capital for long-term survival amid the economic crisis.
- As most customers are staying at home, their demands have changed and grown significantly; is your business prepared to fulfill customer demands and handle their changing shopping behaviors?
Answers to these questions will do much help for you to prepare a strategy for continually operate your business and get through the crisis successfully.
5. Consider provisions in the CARES Act
There are some tax relief provisions done in the CARES Act. These provisions can considerably minimize your tax liability.
“Assistance for Small Businesses
The Paycheck Protection Program is providing small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.”
According to the CARES Act, you may;
- Get an extension to pay your estimated and payroll tax.
- Get tax credits for retaining employees.
- Benefit from business interest deductions
These changes in the CARES Act can help you save precious cash, which can support you to continue your business operations.
This complex and dark phase will eventually come to an end, and at that time, businesses that are facing challenges and taking effective actions against the same will still be standing strong. In the present, utilize your time in developing business strategies, connecting with your customers, making connections with other businesses, improve operational skills, and as a result, your company will be at a stronger level post-crisis.
It is often not easy to put effort and invest time in managing a business solely; it requires teamwork. However, since it is next to impossible amid the lockdown, you may consider teaming up with Cogneesol – we are a leading business process outsourcing company, delivering quality services to businesses across the globe for more than 12 years.
We have solutions to most problems you are currently facing, and if we don’t, we can produce some. To discuss how we can help you in saving your business from failing amid COVID-19 pandemic, get in touch with us today. Call us at +1 646 688 2821 or email at [email protected].
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