This is the third in a four-part series prepared by Restructuring and Insolvency Specialists Association of Bermuda [RISA Bermuda], on insights to help small- to mid-size organizations manage financial, operational, and staffing considerations, as well as directors’ duties and responsibilities, in view of the current COVID-19 crisis.
Many businesses in Bermuda are currently subject to an unprecedented and enforced restriction on operations. Some businesses are trying to continue with workforces operating from individual employee homes, while others continue with significantly reduced operations and staff laid off. No business ever planned for such events, so how do you operate your business under such conditions?
This article offers some practical operational actions you can take now to support your business through this crisis and emerge stronger at the end.
1. Assess your business
Owners and managers should all be involved in crisis management and reacting to situations as they appear. There will be business critical operations and expenses and these need to be prioritised. Ensure these are identified quickly and assess how they will be maintained.
An honest and non-emotional assessment of the business needs to take place as soon as possible as well as continual operational review through the crisis period. Questions to ask may include:
- Can the business operate in a limited or different capacity? What changes need to be made? This could involve repurposing machinery or production, through to hiring additional staff if an online delivery model is being pursued.
- What are the key “ingredients” needed to maintaining limited or break-even operations? This may include a healthy workforce, access to customers, or raw materials being available. Without all the “ingredients” it may be impossible to continue to trade.
- Be clear there is a purpose to continuing to operate through the crisis period, as increasing losses to service a small number of customers may make recovery more difficult in the long run.
- Are you reliant on a limited number of suppliers or customers? How are they performing and are there risks of any stakeholders ceasing to trade with you during the crisis? A concentrated supply chain or customer bases is a key risk to any business at any time, but particularly in a crisis. Diversification will aid chances of weathering the crisis.
- Do customers know how to reach you? If you’re now reliant on your online presence, is your website and ordering process easy to navigate and secure? Poor online presence can drive customers to competitors.
2. Innovation and change
Successful businesses rapidly find new ways to work with customers, drive revenue and use technology to solve challenges and identify opportunities.
Innovation and change can help retain great employees. If their current role is not applicable during the crisis, do they have other useful skills or are there other opportunities where they could be redeployed? Retaining good staff combined with a flexible operating model can be critical to a successful outcome. We have seen perfumeries move into making hand sanitiser; a number of online delivery services established or growing; and restaurant suppliers looking to service the public directly. All excellent demonstrations of innovation and change driven by the crisis, growing market share, brand awareness and retaining key staff.
Businesses need to be mindful, however, of how quickly the crisis may change and the need for flexibility in your operation to move back into core markets [e.g. a restaurant supplier needs to service its old customers again, but at what point?].
Where a business has changed its customer base during the crisis a decision needs to be made as to the optimal business model as the island returns to normality. Is expansion a possible outcome of the crisis?
For businesses that have significantly reduced operations, there are a number of key considerations, such as:
- Can you restore your business easily once the crisis is over, or will there be a period of ramp up required?
- Are the staff/skill sets you need available for when business demand picks up? Businesses need to plan now for a return to “normal” trading.
Post crisis, consider what type of organisation you need. Focus on shaping your business with “built-in” flexibility and resilience. Change the business to combat threats identified in this crisis.
3. Seek support and advice… and offer the same
Seek advice and input from lenders, customers, suppliers, staff and professional advisors to identify areas to reduce costs, explore opportunities and ensure ongoing operations are meeting the needs of your customers, while staying true to your brand/mission/goals.
Be aware of the support being offering by the Government, BEDC, lenders, landlords and other private institutions during the crisis and take advantage of that relief if applicable.
Along with seeking advice for the business, you should ensure your staff are supported and have the information they need to seek help and make any appropriate claims.
*RISA Bermuda consists of accountants, lawyers, and other individuals who are directly or indirectly engaged in the business of insolvency and restructuring in Bermuda. Refer to www.risa.bm for further information. No insights from this article constitute legal, financial, commercial or other professional advice.