Prepping for the Coronavirus

28th February 2020

So, have you started stockpiling food yet, in case the Coronavirus hits?

I was surprised when one of my business contacts told me that her utility room was now full of extra cans of fruit and vegetables, non-perishables like pasta and rice, as well as cleaning materials and toilet paper…

She had seen videos from Asian cities under quarantine, where there were rushes on supermarket supplies, and was afraid the same might happen here.

“There’s no downside to being prepared,” she told me. “What’s the worst that could happen? If there’s no quarantine, we’ll just eat through all the food slowly!”

And actually, she’s right. There is no downside to being prepared.

But while it might feel premature for most individuals to stockpile food, this is a lesson that business owners must take extremely seriously.

Even if Coronavirus remains relatively contained in the UK, there is a high chance that the epidemic will play havoc with our economy.

Production in parts of China has ground to a halt, and as the virus spreads, there could be shutdowns elsewhere as well.

All this can hit supply chains around the world weeks and even months later, as vital parts become unavailable.

In fact, it’s happening already. Jaguar Land Rover has had to resort to fly in car parts in suitcases (!), because it is already running short.[1] Apple has also warned that supply of iPhones will be affected.

And even without a big supply chain hit, according to the New York Times, the American economy is going to experience a slowdown because Chinese travel and economic activity are picking up more slowly than expected. [2]

So when China sneezes, America catches a cold… And we will too, most likely. (That’s the global world for you….)

How will you weather this storm financially?

Now, you might be thinking it won’t be a problem!

I mean, you don’t import anything from China or from any of the places affected… So why would you feel the disruption?

But of course, that’s not the whole story.

What about your customers? What if their businesses are hurt because their own supply chains are affected? Or what if they export to an area hit by the Coronavirus, and suddenly their market shrinks?

If your biggest customer starts to struggle, you will feel the knock-on effect!

And what about your own suppliers? Are you 100% sure that they are going to sail through this potential crisis with their own supply chains intact?

How will that impact you, if they cannot get parts you need… Or if they are suddenly in financial trouble?

To assess how this outbreak might affect your business, it’s not enough to look inside your own four walls.

You need to understand how each and every link in your supply chain and customer base might be impacted.

Then you need to work out the financial implications – and make contingency plans.

Now, I understand why you might feel reluctant to go through this exercise.

Life is busy….

There have been so many pandemic threats before, which came to nothing…

So why waste time on something that will probably never happen?

To which I have two answers….

1. Because it still might happen. The chances might be low, but it’s not completely unlikely that you will experience disruption as a result of the Coronavirus. 

The situation is unpredictable and evolving the entire time!

If you’ve never even thought through the possible scenarios, and started to consider how you might handle them, you’re going to be caught offguard at the very worst moment for your business.

And the damage will be a lot worse.

Just that little bit of forward planning – maybe as little as 30 or 60 minutes – could make all the difference.

2. Because it’s what mature businesses do.

Established, grown-up businesses systematically manage risk. They map out possible threats and put in place plans to deal with them.

That’s why they survive when the worst happens….

…Which it sometimes does!

Small businesses deal with threats on the hoof …

…Which is why they are so much more likely to crash and burn.

They can’t take action fast enough, can’t finance the quick adjustments they need to make and don’t have the financial wherewithal to withstand serious crises.

Which kind of company do you want to be?

Here at Insight Associates, we work with companies turning over more than £1 million, which are eager to run in a more professional, grown-up way.

And part of our Outsourced Finance Department service is to help you manage risk, because doing so is crucial for the financial resilience of your business.

If you’re ready to take that next step up in the way you manage your finances, give me a call on 01279 647 447 or email me today, and let’s talk about how we can help you.

Remember – there’s no downside to being prepared!

For factual information on the Coronavirus disease (COVID-19) outbreak please refer to the World Health Organization website here.

[1] https://www.bbc.co.uk/news/business-51548976

[2] https://www.nytimes.com/2020/02/24/business/economy/coronavirus-markets-economy.html

 


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