Coronavirus Business Planning

With the shutdown of major social events and other public gatherings, the potential effect to small businesses could be devastating.  We must look to health and safety first but must also consider the financial issues that are looming as a result of this virus. There are steps that should be taken to plan for a more efficient and effective financial future.  We would like to present to you an outline of processes to successfully get through a downturn in business and the economy.

  1. Put together a short-term business plan that clarifies all areas of your business.

    1. This includes sales, marketing, operations, finance, accounting, and administration. 

    2. Delegate tasks to each department head to develop a plan.

    3. Each plan will consider human capital requirements, expenses that can be reduced, or possibly business opportunities that could exist as a result of the virus.

  2. Create financial projections for the next 12 months that are accompanied by detailed assumptions. 

    1. Consider the impact to revenues, receiving inventory from suppliers, cost structure (fixed, variable and semi-variable expenses), and the fact that your employees may have to work at home.

  3. Determine if you can conduct business effectively using non-traditional methods.

    1. With digital assets instead of a meeting, you could utilize video conferences, conference calls, and transfer data electronically.

  4. Ascertain new business opportunities in your line of business.

    1. We are helping to create programs to assist our clients through this downturn by implementing proper planning and execution.

  5. Determine if you have excess human capital, or how you will utilize all staff during a downturn. 

    1. Do you need to layoff unnecessary employees or find alternative job functions within the company during this (hopefully) short period of time?

    2. Typically, businesses have a lot to clean up that is put off and never gets accomplished. This could be an opportunity to become more organized and create a more efficient and effective working environment.

    3. As an owner/entrepreneur you are the one who has the vision. 

      1. Are there other job functions that an employee could take on to increase future revenues and allow the business to run more effectively. 

      2. It is hard to find good people, so divesting of workers could be a long-term mistake.

    4. Case in point - we did not cut staff during Harvey and were paid dividends afterward.

      1. Other CPA firms did not have the adequate human capital to take care of their clients’ 2017 tax preparation. They have since had to go out of business or sell out to larger firms for a discounted price.

  6. Be careful not to overstock inventory or get caught shorthanded when everything normalizes.

    1. This is a very difficult decision process. Having good cash balances is critical.  Having inventory levels is a tradeoff of having larger cash balances.  Inventory, however, is where you generate profits and thus larger future cash balances.

    2. Focus on what is adequate to cover your projected sales estimates.  This is another good reason to have a one-year projection.

  7. Establish a disaster recovery program while you are living it!

    1. This is an opportunity to record history that could potentially be used again for future events or downturns in the economy.

    2. This is no different than creating processes and procedures to allow your business to operate more effectively.

  8. Plan for possible more available human capital to assist.

    1. If you have a slowdown in operations, your employees could assist with planning for the future.

      1. Put together a five-year plan that begins when the economy picks back up.

      2. Establish a capital asset program. 

        1. Determine what capital assets are not meeting expectations with current technology.

        2. Do you need to add fixed assets to expand operations capacity?

      3. Update your marketing plan.

        1. Focus on new technology and the wide array of digital opportunities.

        2. Review past traditional methods that have not been considered for years.

      4. Clean up your accounting/books and records

      5. Write job descriptions

      6. Update your website

      7. Develop complete processes and procedures for your business

      8. Work on succession planning if you are near retirement.

      9. Create an estate plan.

      10. Evaluate the core values of your business. Are you authentic with how you project yourself in the marketplace?

  9. Rewire your infrastructure to allow employees to work from home.

    1. This can increase effectiveness and free up office space for expansion.

    2. This can contribute to a better lifestyle for your employees who work well independently.

  10. If you are spiritual, pray a lot and think through your moves patiently.

Call us at (713) 243-8590 if you would like help putting a plan in place.

Taylor Alva