How businesses can stay afloat during crisis

We use a famous tag line that if you do not manage risks you manage crisis. But what do you do when a crisis presents itself? I would say do not waste a crisis! It is a time of confusion and unprecedented time that no-one could have accurately predicted.

A pandemic has stalled the world and we have all but to adjust and do things differently. Many analysts have cast doom to the business sector, with one of them saying that there are businesses that will shut their doors forever, while others will thrive during this time.

The actions or inactions of businesses will directly impact their closure or their survival. The strategic decisions made by businesses will spell doom or success. One would therefore ask, what are the things that one can do to stay in business?

Businesses are struggling to be innovative to generate revenue to keep afloat during this time. Many businesses are having to think about their revenue streams and how they can generate income while still complying to the working guidelines issued by governments.

When everyone is now at home, they are in the online space; they have time to go through several chat platforms. It is the high time to take goods and services where the people are.

We have supermarkets who have designed marked lines on queuing rows and provided one-metre distance to comply with the social distancing rules. Supermarkets are also delivering packaged food and shopping to homes. They have strategised on how to still do business and become more creative to stay afloat. All other businesses need to become innovative to stay in business.

Schools have created or adopted to online learning platforms and continue to execute their mandate. This is the time to innovate and stay in business or otherwise close shop forever.

DEBT COLLECTION

There are businesses who sell their goods and services on credit. They are therefore owned money by organisations and individuals. These are also known as debtors or payables. A business can be very profitable but runs the risk of liquidity and eventual closure. This is the time to collect the debts and do it as fast as possible.

Any business that is experiencing liquidity challenges now will need to craft a good strategy to collect debt, otherwise the risk of closure is eminent. It is time to enhance debt collection activities. The money the business is owed will facilitate it to stay afloat during this period as well as be able to craft different strategies to keep operations running. Being proactive is key at this stage.

In circumstances that the business is financed by loans, they face a real risk of inability to repay based on the schedule of payments agreed upon with the financial institution. The Central Bank of Kenya has issued instructions to commercial banks to undertake loan restructuring for business that can prove that due to the Covid-19 pandemic they are not able to operate and generate revenue. Businesses should provide evidence to this effect. This is key for the future survival; businesses cannot assume that banks will provide a blanket waiver due to the pandemic.

Banks are commercial entities and have to also make prudent decisions to continue being profitable. Businesses should therefore prepare adequately to convince the banks that they are affected by the current directive in order to restructure their facilities. Adequate documentation and preparation to illustrate this is critical during this meeting with the financial institution.

OPERATIONAL COSTS

Every organisation incurs operational costs to conduct business, which include rent, salaries, electricity, water, amongst others. These costs are necessary to hold the business in place with or without revenue. During this time every business must make a decision on how to cater for these costs.

Businesses should understand that we can control some of these costs. Salaries can be negotiated through candid conversations with employees. The rental costs can also be discussed with the respective landlords. Businesses can opt to take small spaces or retain their spaces as they renegotiate a suitable payment plans for rent arrears once the situation is resolved.

The costs of electricity and water are totally in the control of management. Measures should be put in place to control use of electricity and water on need to use basis. The business should analyse all its liabilities and make strategic decisions on how to cater for them in the next ninety days.

Critical thinking and analysis are key to ensure that these costs do not affect the survival of the business in the future.

There are those businesses that can continue operations remotely. These means that their staff members work from home. The business should craft ways of managing these staff and the deliverables. The business should provide the necessary tools to their staff members to continue with daily operations. These tools include laptops, data, and access to information required to perform their tasks.

DATA SECURITY

There is a real risk of data security that a business should think about and how it can enhance data protection even as the staff work online. Some of the measures may include signing of a non-disclosure agreement by all staff, securing office laptops with access times and tools that can be used to enhance surveillance remotely.  

There should also be provision of secure internet to staff to secure data for the organisation. Businesses should also schedule frequent online meetings with staff. A morning roll call and an evening review meeting would be good to keep things in check. This also enhances good communication and review of key performance indicators during this time.

This is the time to take this crisis, analyse the opportunity and run for it. There are businesses that will shut their doors forever, there are business that shall thrive and take an upward trajectory, and there are new business that will emerge and stand the test of time. This shall all depend on how creative or not business owners will be during this time. It is time to do critical thinking and take fast action. The choice is ours to take.  

CPA Caroline Gathii, IRMCert, is an International Certified Risk Expert with FirstIdea Consulting Limited. Email: [email protected]