*Updated 12 March 2020*
The World Health Organisation has declared the Coronavirus outbreak a global pandemic. At the time of writing, New Zealand has five confirmed cases of Covid-19.
So what does this mean for you, as a business leader and owner? Clearly it adds an additional layer of uncertainty so it is timely to remind ourselves of the following:
Expect the best and plan for the worst
- The true scale and effect of the coronavirus are yet to emerge so lead by example, keeping a steady head. Look for quality data regarding Covid-19. The BBC may be more reliable than social media, choose your sources wisely.
- Ensure that your people, or at the very least your key people, can work from home and have a device with a fast, reliable internet connection to allow this.
- Be aware that in New Zealand, we may need to lift our efficiency levels at short notice. For example, in Singapore office buildings entrants have to wait up to 30 minutes to have their temperature checked before being allowed in. What would be the optimal solution in New Zealand? Perhaps remote meetings using platforms such as Zoom or Skype. Upgrading your internet service may be an excellent step, as it can always be downgraded as needed.
- Ensure that you have business interruption cover in place, with the right limits.
Panic slowly and address fear early
- As the leader of your business, remain calm and reassure those who seek peace of mind and certainty from you.
- Fear can spread like a bushfire, build a fire break, and make it wide enough using proactive communication and reassurance for your team.
Manage your cash wisely
You already know that cash is the lifeblood of your business. That’s why we recommend the following:
- Ensure that you clearly understand the current level of your cash reserves.
- If you do not have a cash flow forecast prepared, there has never been a better time to prepare one.
- If you do have a cash flow forecast prepared, review it weekly, work with it daily and have it prepared monthly for the next 12 months.
Look after your cash and it will look after you.
Keep very close to key customers and suppliers
Customers
- Be realistic with supply quantities and pricing. If there is bad news, hiding it from your customers is the worst action you can take. Customer trust takes months, even years to build up and can be destroyed by one mistake.
- Customers worth keeping will appreciate a professional and proactive response – remember, they have others depending on them as well.
Suppliers
- China (currently worst hit by Coronavirus) is New Zealand’s number one trading partner. The growth in the amount and importance of this trading relationship in the last ten years has been massive. Like it or not, China is economically critical to New Zealand.
- Ensure that you are communicating daily with your Chinese suppliers. Ask for a realistic assessment of the true impact of any delays in the supply timing, quality and quantity of your imports from China.
- Ensure that you set up additional arrangements, where possible, with suppliers from countries other than China, so that you can manage the risk on non-supply to your customers.
Be wary of the media effect
Remember, the media primarily exists to sell publications. So in a world where sadly, bad news sells; it is critical that you as a leader and in particular your people do not fall prey to negative hype around Coronavirus designed to sell publications and make money.
Takeaways
In my experience of many downturns, global virus outbreaks and regional wars, they all have a number of factors in common:
- Timing is clearer than impact, at least initially.
- As fear takes root, shedding some light on things, by way of quality data is the best disinfectant.
- A head-in-the-sand approach is not useful.
- A clear, logical, well-thought-out and executed risk management plan will address the five points detailed above. It is the best protection you, as leader of your business, can provide. Don’t delay, act now.
- Looking back on many crises and issues, with the benefit of hindsight – an ounce of planning was worth a pound of protection, and certainly more than a ton of panic.
- You may find this website a useful resource for the latest advice: https://www.business.govt.nz/news/coronavirus-information-for-businesses/
By Murray Fulton
Director | Advisor