The coronavirus pandemic is testing the ingenuity of American businesses as never before. Companies are conducting major overhauls of their business plans, profit models, operating procedures and even human resources policies. These changes would normally call for months of careful research and planning but are now being implemented in a matter of weeks, if not days.
While speed is of the essence, any changes your business makes in response to COVID-19 must still be rooted in solid financial insight and intelligence.
Inspiration Amid the Devastation
It would be easy to give in to despair in response to the daily onslaught of grim news. But each day also brings inspiring stories of business leaders who have made agile adjustments that have not only enabled their companies to remain open, but also preserved employees' jobs and provided the public with much-needed services and products.
Here are just a few examples:
- Restaurants across America are using donated funds to turn overstocks of food into free meals delivered to healthcare workers, which also helps keep employees on the payroll. In addition to offering traditional delivery services, some pizza shops now offer make-your-own pizza kits, which result in a family activity as well as a meal.
- Some manufacturers have reduced traditional inventories and retooled to provide medical equipment that's in short supply. For instance: a switch from hockey helmets to protective face shields, a conversion from distilled spirits to hand sanitizer and a changeover from technical apparel for outdoor sports to protective masks.
- A medical device manufacturer aggressively pursued a deal to add desperately needed ventilators to its product line, a plan that would have the additional benefit of creating 100 jobs.
Do The Right Thing and the Smart Thing
As eager as business leaders are to create new opportunities for themselves and their employees, it's still vital to follow best practices. Here are a few pointers to keep in mind.
- Stay in your lane. It's one thing to retool a manufacturing business from one product line to another or to change a restaurant from primarily eat-in to takeout or delivery. It would be quite another to try to convert a manufacturer to a food-delivery service or a restaurant to a company that makes personal protection equipment. Any change in your company's direction should remain centered on your core competencies. Venturing too far afield could turn a manageable financial challenge into a catastrophic one.
Also, bear in mind that the larger the company, the greater the logistical challenges of any attempted pivot. As S. News & World Report put it, "Makers of heavy goods such as cars and trucks can't just flip a switch and produce something else."
- Don't trade short-term gain for long-term pain. If your business offers prepaid services or a monthly membership or subscription, it can be tempting to leave that revenue spigot on, even if social distancing policies preclude actually delivering the service you're selling.
Don't do it. The backlash could irreparably damage your company's reputation — and might even spark lawsuits. It would be far better to go the opposite route and devise a means to deliver your service remotely, even if you can't immediately monetize it. Many fitness studios and gyms, for instance, now offer classes free of charge or at reduced rates as a way of maintaining memberships through this fallow period.
- Relax rigid HR rules. Policies regarding paid time off that made sense during normal times might not make sense now. In addition to complying with the new Families First Coronavirus Act (if it applies to your company), think of further ways to support your employees. If you're one of the lucky ones whose business has been deemed "essential" during the pandemic, give your employees some latitude. You could, for example, suspend the requirement that they provide a doctor's note to claim sick time. Also, consider implementing flextime for parents whose children are no longer at school during the day.
- Continue your due diligence. Ideally, you would write a business plan to account for any adjustment or pivot that your company makes in response to the coronavirus crisis. And even if you don't have time to develop a full-fledged business plan, it's still a good idea to do market research and run cash-flow forecasting to determine the most viable course to follow.
And if you're seeking financial assistance through the Small Business Administration, professional bookkeeping services can help you keep up with an extremely fluid situation.
Adapt Your Business With Bookkeeping and Financial Insight
Business leaders are responding to the challenges posed by the COVID-19 crisis with inventiveness and ingenuity. As you think creatively to find new solutions, use steadfast bookkeeping practices, financial analysis and cash flow forecasting to make informed decisions for your business.