For most businesses and many self-employed workers in the UK & Ireland, the last 6 weeks has been focused on taking steps to manage business in a state of lockdown. For many the impact has been huge, being a significant reduction, if not a total loss of revenue.
As we move towards the summer months, it appears we’re now reaching the stage where many businesses need to consider how they might transition from the lockdown to a sense of working normality, or what some are now calling the ‘new normal’.
However, it’s clear that the ‘new normal’ is not normal at all and the impact of this pandemic is going to be with us for some time and across many strands of business including sales, finance, operations, procurement and HR.
Therefore, when returning to work, for many sectors it won’t just be a return to the status-quo and significant planning is going to be required to ensure businesses minimise the ongoing impact of Covid-19.
Whilst every sector and business are likely to be in a different situation, the team at CavanaghKelly summarise some of the considerations for businesses at this time:
Phased return to work and ongoing social distancing
Other countries are easing their lockdowns by transitioning certain sectors based on controlling the risk to avoid further outbreaks or a second wave of the virus and it seems sensible to presume we’re likely to follow a similar approach (the media are suggesting some form of announcement will be made in the coming days on this). This is likely to entail a phased opening approach over the coming months.
The above will dictate when businesses can get back to work. However, the workplace is likely to significantly change for many businesses due to the requirement for social distancing.
The vast majority of medical opinions point to the likelihood of some form of social distancing being required until a vaccine (or other proven treatment) is developed, produced and widely available amongst the general public. Many informed commentators appear to believe this is 18 – 24 months down the line.
Given the likely protracted nature of this pandemic noted above, business leaders need to work through their own risks and interdependencies to proactively balance health and safety with a readiness for a return to efficient and effective working, and bear in mind that this new way of working is likely to be here for some time.
When the restrictions are lifted, it’s likely that the economy will see businesses and consumers initially being more cautious and as a result demand may be sluggish. There will also be time lag issues from the lockdown.
The impact of the above on sales volumes needs to be carefully considered and sensitivity analysis and financial planning should be carried out to consider the likely impact of different levels of sales activity on working capital and debt serviceability.
Our advice is plan for all eventualities so that you can be as flexible and as agile as possible, making adjustments and adapting your business depending on demand.
Repurposing / Adapting / Evolving / Learning
Depending on demand, you may have to think outside the box and pivot your sales focus in different directions.
Many manufacturing businesses have already repurposed to provide PPE supplies and hand sanitiser whilst restaurants have moved to offer take-aways and other businesses have focused on online sales.
There’s potential for many sectors to repurpose and develop innovative solutions. As the economy gets back up and running, other opportunities will appear so encourage creativity and ingenuity amongst your teams. This could mean pivoting to new products, new customers or even new markets.
There will also be valuable knowledge and experience gained from what has worked well during the lockdown e.g. remote working, using technology to avoid unnecessary travel to meetings and flexible working for some staff. Take any positives on board and build on these.
Cash is king
It may be an often-used term but cash is king, especially in periods of economic uncertainty.
If demand is expected to be sluggish and it’s going to take some time to return to previous levels of activity, business leaders need to take decisive actions to strengthen their finances and optimise cash. You may have adequate reserves now but nobody can be sure how this will impact business over the next 24 months.
This approach includes reinforcing liquidity, improving discipline around working capital and reviewing all non-essential spending. You can read more about our guide to cash flow management here.
Health & Safety and its impact on operational efficiencies
The majority of businesses will have to implement social distancing, keeping workers and customers more than two metres apart from each other. Some reports indicate that wearing face masks in workplaces and on public transport may also become compulsory.
We’ve all seen supermarkets introduce safety measures to keep shoppers and staff apart, including plastic screens at checkouts, limiting the number of shoppers allowed inside, and floor markings to keep shoppers apart.
• What measures / guidelines will be required in your business?
• Will you have to invest in new equipment or additional space?
• What PPE will you provide to your employees/customers?
• What will your approach be to cleaning and infection protection of the work place?
• Can your operational model be adapted? Will it have to be adapted?
• What impact will these measures have on operational efficiencies and overall profitability and how can this be minimised whilst prioritising health and safety?
Supply chain management
It’s likely that there will be a phased approach to lifting the restrictions across different sectors and individual countries will have different approaches, policies and related timings and this could impact on the availability of materials/services across your supply chain.
Businesses which rely on others for the supply of raw materials, finished goods or services will have an urgent requirement to ensure that suppliers are going to be able to service demand and in a timely manner.
Therefore, contacting suppliers in good time prior to opening up for business is essential, as is considering back-up tier 2 & tier 3 suppliers as you don’t want to leave yourself exposed to any delays, price movements or business failures.
For the many businesses that have closed down over the last 6 weeks, there will be a real need to consider a plan for re-engaging and informing the wider public that you’re open for business once more. It may also be advisable to speak to your main customers to understand likely demand moving forward.
Whilst many businesses will have cut marketing activity and customer engagement due to lack of demand and to save costs, consideration will need to be given to rekindling and reconnecting and creating awareness and demand for your goods and services.
Unfortunately, there is likely to be corporate and individual insolvencies as a result of the pandemic. You may therefore also wish to review your payment terms with some customers and ensure you have valid retention of title clauses within your terms and conditions.
As touched on above, ensuring the safety and well-being of your employees in the workplace will be essential. There are a number of considerations in respect of this that businesses may need to consider:
• Will all employees be able to return to work?
• Employees will expect you to implement safe operating and working procedures and environments and adhere to relevant guidelines.
• Employees will also expect open, clear and transparent communication in respect to safe working policies.
• Will shift working or flexible working be required?
• Will you have to reorganise teams or reallocate resources?
• Employees / subcontractors may not be allowed to share vehicles on the way to work/jobs.
• Public transport may be slow to get back to full timetables and this may impact on ability of people to travel to work.
• The lockdown may mean employees return with a different perspective so ensuring their health and well-being should be at the top of business priority. In addition, developing a plan to mitigate employee fears and concerns should be a top priority.
One of the biggest business challenges with the ongoing pandemic is that no one knows how long it will take to get back to business as usual.
However, we do know that much of the economy is going to have to get used to substantial change and it’s not going to be for 2-3 weeks.
Our advice is to get ahead of the curve by planning and preparing for this across all areas of your business. By doing so, you’ll minimise the risk of disruption and instil confidence in your ability to deliver for all stakeholders.
Whilst every effort has been made by CavanaghKelly to ensure the accuracy of the information here, it cannot be guaranteed and neither CavanaghKelly nor any related entity shall have liability to any person who relies on the information herein. Information given here is for guidance only. Detailed professional advice should be taken before acting on any information contained herein. If having read the guidance here, you would like to discuss further; a member of our team would be pleased to help you.