How to Minimise The Impact of The Coronavirus on Your Business
What to expect and what to avoid
What every business can expect from this pandemic
My reason for writing this is to ensure that you’re not caught off-guard by the non-medical impact of this pandemic.
While everyone is freaking out about the virus. They’re not necessarily thinking about the far-reaching economic impact.
Closing schools means parents being off work to care for kids.
Closing businesses, grounding flights and telling people to stay indoors is going to have less people spending.
Shopping centre’s will be desolate
Restaurants will be emptier
In fact, I had tickets to the Wales vs Scotland Six Nations rugby game that was just cancelled. My tickets were £90 each. If all 75,000 attendees paid that, then the Stadium has lost almost £7million in ticket sales alone today.
Not to mention food & drink revenue that they’ll no longer be taking in. That’s stock that they’ve already bought and paid for — and some of it may spoil.
That’s just one example of humongous economic loss.
So how do you protect yourself against such economic uncertainty?
It’s important to ask yourself if your products or services will be needed or become ‘essential’ during a time like this. Sales of water, food, toilet paper, hand sanitiser and the like have all shot up. Has the demand for your product?
Below are some tips that can help you understand your situation and help you navigate a path to security during this time.
Independents, entrepreneurs & self-employed individuals
Unfortunately you’ll be the first ones affected by this pandemic.
When schools, businesses and events shut down briefly, there temporary or freelance staff are the first to suffer.
Zero-hour contract cleaners or bar staff aren’t required for a business that isn’t open.
Independent training staff aren’t necessary when businesses are following medical advice to not gather in groups.
Self-employed entertainers, musicians and event staff are cut as the events are postponed.
Those are just a few examples. However, the same closures, media fear-mongering and trepidation about this virus can apply across many different areas.
You need to start thinking about how this will affect your business.
As entrepreneurs, independent business owners or those who are self-employed don’t have the same sickness/loss of income benefits — they’re going to be hit hard.
Wholesalers — The supply and demand problem
As the supply chain struggles to meet the demand following China’s long hiatus, demand will start to exceed the available supply in many areas.
Wholesalers who depend on bulk shipments of cheaply-made products in China will suffer.
Ports have been closed, factories have been closed and the workforce (in some instances) has been quarantined since Chinese New Year.
This lack of influx in product will create a supply and demand problem — but that’s just the lucky ones.
Other wholesalers NOT experiencing supply issues.
As B2C (business to consumer) businesses are closed or experiencing economic uncertainty, they’ll start to order less from wholesalers.
That could leave them with a stock liability above what they’re comfortable with.
It works like this:
The customer doesn’t impulse buy because they’re at home on quarantine or have experienced a loss of work/income.
The B2C Business has more stock and less sales.
Their disposable income to buy in more stock is at risk and the demand is down, so they don’t order any more stock.
The Wholesaler suffers a loss of sales but has already paid for the stock it holds.
This puts wholesalers into a massive risk category.
How Can You Protect Yourself?
Buy less unessential product
Keep more cash
Make sure you have enough food & water to see you through short-term disruptions to the supply chain.
The individuals and businesses with a high cash-reserve tend to survive during times of panic and economic uncertainty.
This isn’t just about having more disposable income, which is great, but it’s about having the ability to wait out the storm.
Cash is King.
A cash reserve in savings allows you to negotiate the price during times of economic uncertainty, or when experiencing a loss of income.
Your bills are still paid, you won’t lose your home and you can still buy food.
Having a savings account is great, but cash is preferred.
I’m not saying the banks will crash like in 2008, but digital currency holds less value during times of crisis.
Don’t believe me?
Billionaire investor Warren Buffett was reported to be building a $128billion cash holding in November last year (when cases of Coronavirus started to first appear in China).
If the world’s most successful investor starts to sell stocks for cash, you know it’s the right move.
Buying less unessential product as a business or individual will ensure any disruptions to your income will be minimised.
Food & water
People panic buy food & water, which causes unnecessary demand on the supply chain. With workers off sick, or quarantined, it now becomes harder for those supermarkets and stores to restock.
The self-fulfilling prophecy of this is that they remain relatively empty (on the essential products) in the short-term, which reinforces the fear in the public domain.
Looking at those empty shelves can be scary.
It’s important to always have at least 2 weeks worth of food & water in your home anyway.
Where I live, in the UK, is massively affected by the natural phenomenon of ‘snowing’, so a disaster, flood, or a pandemic puts a bigger stress on the supply chain.
How to stay positive
China has been closing their makeshift hospitals as the infection rate falls.
As with all ‘curves’ there is a growing panic to the point of maximum saturation — then it starts to fall. That’s good news.
What goes up, must come down.
This pandemic is a transient, ever-changing situation, but it will eventually even itself out. This is not the apocalypse.
As factories start to get back to work, we will experiencing a few months of supply issues, but that will get better with time.
It’s very important to be vigilant during times like this, but it’s also important to realise that it won’t last forever.
With this mindset you can be safe and remain afloat, without compromising your morals or making rash decisions.
As business owners or individuals, you’ll likely experience some loss of income or sales from this pandemic, so until the inevitable bounce-back ensure that your unessential expenditure is low.