COVID-19 has surely brought uncertain times to all of us. It has also brought business planning strategies to the forefront of positioning and maintaining a business. On top of the day to day demands, management has several other critical areas of the company to tighten down. Here are a few observations to evaluate and actions to consider:
Supply Chain Management
Do you know if your key suppliers have financial or operational constraints during this pandemic? It’s vital to understand your supply chain and what restrictions might be out there. Companies will need to have plans in place to adapt to uncertain changes rapidly. Do you have backup suppliers in case one has difficulties filling your orders?
Inventory Management
A delicate balancing act of inventory supply and cash flow management is required in uncertain times. While companies will want to make sure they have inventory to continue production, they will also need to understand that cash flow from sales may slow down during this time. Get in contact with your major customers to see what they are projecting for purchases. Does this fit with what your plans are? Is there a demand for the quantity of product you’ve got that planned to produce? Answering these questions will allow you to properly plan for the rest of the year.
Current Financing Availability
Now is a good time to actively discuss your current financing to make sure it is still available. You can also explore new or additional options should a time come when you require them. There are several new economic relief tools available through legislative acts to ensure business financing:
- Paycheck Protection Program (PPP) Loan
- SBA Economic Injury Disaster Loan (EIDL)
- MN DEED – Small Business Loan Guarantee Program
Capital and Operations plans
Has anything changed since you did your budgeting and forecasting for the year? Time to take a second look and determine what still makes sense from both a short and long-term perspective. You might have to throw the annual budget and multi-year forecast away and start planning for the next two to three months. Anticipate if there will be capital purchases that are needed to position yourself for the rebound after the situation improves, giving you a strategic advantage. Are there capital purchases currently planned that should be delayed until the situation improves? Are there cost reduction measures that need to be put in place? Companies should be prioritizing flexibility and making sure they are positioned to scale back and ramp up again rapidly.
Receivables Management
Receivables management is an easy area to loosen up on during good times, but it is also an area that needs special attention during uncertain times. Understanding your customers’ financial situation is critical in uncertain times. Pay special attention to customers who are modifying the length of time they are taking to pay invoices. Collection efforts and management may need to be increased in these situations. It is also a time to make sure you are providing complete and accurate invoices, any delay because of corrections to invoices will only delay the payment process.
Business Interruption Insurance
Make sure to understand what is covered by a business interruption insurance policy. Do you have coverage for interruption by communicable diseases? Make sure you discuss if COVID-19 falls into this situation. If you can establish that you are properly covered, documentation of losses will be paramount in filing a claim.
Workforce Management
A plethora of challenges resides in managing a workforce. Are CDC employee safety guidelines being followed as they evolve? Communication of the changing environment has never been more critical. Has a strategy been developed for maintaining a skilled workforce? While the economic slowdown experienced by many during this pandemic might have you feeling over-staffed, it was not long ago that the manufacturing industry was seeing shortages in their skilled workforce. It’s hard to say when production needs will pick up again, but not having a trained production crew in place when times do pick up could slow your recovery. Are there strategic programs available to keep your workforce employed? If that’s not possible, then what strategic ways can you utilize the programs available to keep them close and benefit the Company? The use of unemployment, a shared workforce, and the Paycheck Protection Program are just some of the tools available to companies. It’s never been more important to stay up to date on the information and economic relief being presented daily.
The only constant shared by business owners during this COVID-19 crisis is the amount of uncertainty. Navigating through it all is a challenge for the most experienced business owners and staying on top of the ever-changing environment is a lot for large management teams to handle. If you need assistance with any of these new business strategies, consider reaching out to Olsen Thielen. We are all in this crisis together, and together is the way we are going to get through it.