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Over the last year, many businesses, large and small, have come to realize that disaster can strike in unexpected and unprecedented ways, seemingly out of the blue. The pandemic that began taking hold of the business world in early spring of 2020 devastated millions, from business owners and entrepreneurs to employees and contract workers alike.
Being forcibly shut down for months resulted in lost jobs, drastically lower revenues, business losses, and uncertainty about the future. However, if COVID-19 brought any silver lining to the business environment, it would be how to prepare for the next crisis.
In taking a hard look at a business’s response to the pandemic, there are likely some things to learn about what to do and what to avoid moving forward. So, in preparation for what may come next, regardless of the severity of the next crisis, consider the following to safeguard your business from potential disaster.
Reflect on Your COVID-19 Response
A global pandemic impacts businesses differently, depending on their size, industry, and business model. While it may feel impossible to plan for the future unknown based on these various factors, the best place to begin is to reflect on business responses to the COVID-19 pandemic.
Consider how well-prepared the company was for transitioning – quickly – to a digital environment, both for customers or clients and employees. Give some thought to how the business shared updates and timely information both internally and externally. Think about what was needed in the immediate- or long-term that was not readily available.
Take the time to think about these items thoroughly and make a list of the what and why behind each success or failure. Then, use this list to inform what happens in the future should something like a global pandemic strike again. It may seem like a painful process to reflect on what worked well and what failed, but it is an essential part of being ready for whatever may come next for your business.
Shore up Reserves
Many businesses floundered during the beginning of the pandemic as they were forced to close their doors to both customers and employees. For brick-and-mortar companies and some industry-specific companies, cash flow dried up nearly overnight as the world shut down. Without enough cash in the bank to cover ongoing expenses, like wages, insurance, rent, and inventory, businesses had little choice but to close shop altogether.
Having the right amount of emergency reserves is a necessary part of owning a business. Just like in personal finance, an emergency fund is designed to provide the cash required to cover unexpected bills or a period of little to no income due to unforeseen circumstances. Businesses of all sizes and industries should consider how much they need in emergency reserves based on a realistic business budget and their overall financial health. Then, work toward setting that aside out of revenue sooner rather than later.
Know Your Lending Options
One saving grace among businesses during the recent pandemic has been access to more lending opportunities than normal. The US federal government pushed through legislation rather quickly to create emergency funding in the form of forgivable loans and low-interest-rate business loans. While these efforts were commendable, there is no assurance that federal assistance would be available for a future global health crisis.
Many businesses can take this time to evaluate their current lending options outside of emergency funding from other sources. Understanding other forms of financing is a smart financial move for your business. Additionally, shoring up business credit and getting the business’s financial stability in good order now may be the difference between a thriving company and one that cannot make ends meet when disaster strikes again.
Adopt the Right Tech
Technology played a substantial role in surviving COVID-19 for many businesses around the world. Although the transition to a fully digital environment may not have been a comfortable or easy one, it provided an opportunity to evaluate what worked well for connecting teams internally and staying connected with customers externally. As we are all coming out from under the weight of COVID-19 and fighting off video-conference fatigue, now is an optimal time to consider what technology works well for your business and what can be left in the past.
Consider checking in with employees to see what suited their needs best from a technology standpoint. This is a beneficial place to start with a technology evaluation. Business owners may also want to check in with customers or clients to inquire about what aspects of the digital shift can or should stay moving forward. The combination of feedback from both employees and customers can help inform which technology is the best fit for the business.
Have a Contingency Plan and Adjust as Needed
Finally, it’s likely safe to say that no one saw the far-reaching impact of COVID-19 ahead of time. Instead, we all had to quickly – and in some instances, inefficiently – adjust to the new normal and push through as best as possible. Fortunately, now, business owners are aware that a crisis of that magnitude could indeed happen again. That reality creates the need for sound planning and flexibility for the future.
Businesses should take the time to develop a contingency plan for operations should the world shut down again in the future. That may include coming up with different sources of revenue, having a straightforward and well-laid-out procedure for transitioning to remote work on the fly, or reducing operations to save on costs. Once the plan is written, it is necessary to review it periodically and adjust as things change. The willingness of business owners and leaders to plan for the unknown lays the groundwork for effective responses to a crisis down the road.
