Surviving COVID-19: Have Plan, Will Thrive

The COVID-19 pandemic seems to have no end in sight. Just when we think the curve is flattening, spikes in cases cause businesses and consumers to retreat again.

This is why it’s not too late to hash out your company’s survival plan. Even if you didn’t have one when the crisis started, the return of hot spots and shutdowns means that hard times could be ahead.

Surviving COVID-19 means creating a two-part plan to get through the pandemic—or most any emergency, for that matter.

Part 1: Immediate Survival

Your first step in staying afloat is to ensure as much financial stability as possible, and you can start with cash management. The goal is to quickly find or generate as much funding as you can without laying off workers.

One way to do this is to avoid creating excess inventory. Produce only what is needed for your business to fill demand. Carrying inventory has hidden costs, which is the last thing you need right now.

You can also review your accounts receivable and accounts payable. When clients place an order, provide an incentive for them to pay early. See what you can do to collect from clients who owe payment (keeping in mind current circumstances likely affect them as well). If you owe money to your suppliers, try to negotiate stretching your payment deadlines or extending credit limits.

Another way to help ensure your immediate survival is to look at your fixed assets. Do you have equipment that has sat unused for years? Is it obsolete for your purpose (or simply obsolete)? Consider selling the equipment or parts, even if it means taking a loss; some funds are better than none.

Finally, consider your profit margins and the factors that affect them. You might find areas to raise prices if demand allows. Just make sure you observe federal, state and local price gauging laws. However, avoid dropping prices merely to meet competition. A price war often sacrifices profits for volume and won’t help you get the funds you need now.

Your margins are also affected by your administrative expenses. These costs can be related to sales, operations, administration and more. Consider reducing or eliminating non-essential services such as food and beverage delivery or other perks. Other areas to trim might be non-salary compensation like parking passes or car allowances.

The bottom line: A big key to surviving COVID-19 is having cash on hand. Manage that, and you’ve won half the battle for your business.

Part 2: Resiliency

Now that you’re hopefully treading water, you can proactively plan for whatever the “new normal” might be. Since we don’t know that just yet, this can be tricky. But regardless of what the future holds, you can take steps to prepare.

First, align your strategic priorities. If you asked your management team to write down the most important strategic priorities for the business, would their lists all match? If not, now is the time to clarify those priorities for the new normal.

Get your team together and discuss how you’ll approach the future. Assess your strategy from before the pandemic and see how it needs to be adjusted.

Now take a look at your current customer base for income and pricing opportunities. We’re not just talking your biggest spenders; review all of them, even those with the smallest orders. Ask yourself whether the new normal has changed your customers’ needs.

Then survey your business model and see if you’re meeting those needs. This includes everything from the products you build to your pricing and delivery methods. Businesses that are surviving COVID-19 find these undiscovered opportunities. You never know where new income could be hiding.

You should also review your supplier situation. Now that you’ve seen them in crisis, you can identify vulnerabilities. Are you dependent on a supplier with a single facility? Consider spreading your risk by working with multiple vendors, especially if the current one couldn’t fill your needs. It’s a good time to start qualifying these suppliers and reduce the risk of future disruptions.

With every spike in coronavirus cases, “normal” seems farther and farther away. Your best approach in surviving COVID-19 is to adapt and assume that normal won’t be the same.

Also keep in mind that these efforts can help you in other disasters as well. Even after the pandemic subsides, update your plan regularly for whatever lies ahead. Proactivity is critical when it comes to being prepared.

If you need help, work with a manufacturing CPA to create your survival plan. By understanding how your industry has been affected by the pandemic, James Moore can provide targeted assistance that works best for your firm—in these trying times and beyond.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.