‘The Covid-19 crisis is not an isolated pandemic, instead a long tail interconnected incident with extreme levels of uncertainty, which is well beyond the experience of business leaders, verily a test for many business leaders on how they think and respond to shape strategy’
Social-distancing measures, large-scale quarantine centers, travel ban, closure of sea and airways, lockdowns, curfews etc … had led to a sharp decline in overall consumer and business spending which experts predict to continue till late Q2, head winding towards a recession.
Although the outbreak is expected to come under control in most parts of the world by late Q2, the aftermath effects tend to show ripple effect till late Q3.
Demand suffers as consumers tighten spending/ (spending to confine on the very essentials) thus businesses loose revenue and workers laid off, business investments frozen, corporate bankruptcies provoke, significant pressure on the banking and financial system given the low interest rates and loan moratoriums granted and many more pessimistic challenges are said to give rise from an economic perspective, thus effecting individual businesses.
In order to curb the negative outcomes of this outbreak, businesses, especially SME’s should plan well ahead, understand which scenarios may likely give rise. This process of planning for different outcomes is referred to as Scenario Planning
When there is a long tail of uncertainty, cost management is a vital factor. Some organizations might manage cost based on the need of the hour through slashing some cost to almost near zero or reducing a significant portion of cost till business gains back momentum , yet again depends on factors such as strength of the business in terms of cash and need to uphold business reputation.
Here are some areas which cost management is required
Considered to be the cynosure that business leaders would focus at the very outset of managing cost.
Measures would be to match inflows with outflows thus cutting down the so called (FAT) components or unnecessary cost. If the so called (FAT) is legally/contractually obliged seek for measures to defer payments.
Expedite the process on cash collection from receivables by offering some incentives such as discounts on quick payments and worse case installment-based payments
Try to speak to suppliers on wave offs as much as possible or relief periods to pay. (depending on the long-term relationship built with suppliers)
Get the consent of lawyers/industry experts in tackling contractual obliged payments.
Try to avoid building up on inventory which will be subjected to holding cost and opportunity of cash. Experts say it may be okay to let go on small demand vs trying to build up on inventory.
Seek for opportunities to reduce/avoid this upon discussion with the landlord. Worse case defer such payments. (Use of Force Majeure may be required if it’s part of a contractual obligation)
It would be rational to freeze capex expenditure and focus on current operation till business gains momentum and demand becomes stable.
Technically you would not need marketing expense since consumers are reluctant to spend(exception on essentials and pharmaceuticals),but some businesses would consider spending a minimal amount in order to uphold business reputation while a few large firms will try to spend on a few social responsibility projects and use free marketing strategies to promote them.
No new hiring till recovery, existing employees are shared additional responsibility
Coordinate with team leaders on payroll solutions-be pragmatic but humane, focus on people cost to be undertaken after all other costs are reviewed and dealt with.
Relook at the roadmap-rethink of alternative strategies/navigations in plans required for the long-term goal.
Discuss waivers and moratoriums with the mindset “no costs are really fixed”(especially G&A)
As perceived for the worst outcome it is most important for startups to elevate its runway through fundraising. A good round of fund raising should be able to increase current runway by at least 12 months.
No matter how lucrative and optimistic your business may be, an investor will not rush into an investment due to the investor’s pessimistic mindset and other interests (holding onto liquid cash for precautionary motives) and therefore may it be a PLC or SME, it is always advisable to progress with a “decreasing familiarity” as mentioned below
Employers could use this unprecedented tough time to test productivity/efficiency of a team or the organization as whole in the absence of physical presence and ambiguity on strategy. On contrary this is a self-test on each employee/team leader towards contribution on team goal, dedication, tech savvy, virtual communication/listening skills etc…
In order to uphold the upbeat of the team which has declined mentally and socially as a result of self-isolation and lockdown, some organizations offer online team competitive challenges, founder or HR folks (something non related to work).WhatsApp groups sharing information related to basic essentials or positive news on the pandemic is yet another useful tip to uplift moral and upbeat.
Re alignment of roles– Identify employees with less work (less productive due to the catastrophe) at this point of time, agree to restructure those employees with other roles.
Defer appraisal-It would be rational to push back increments, bonuses or any other planned cash appraisals (being well aware on contractual obligations) and promote non cash appraisal methods instead.
Pay reduction/deferrals-Better if this could be a voluntarily undertaken move. If this strategy is to be implemented it would be best to allocate on the “descending order of the organizational pyramid” as a bottom up approach of pay cut or deferral could impact moral of employees, especially ones who have just started their career.
Alternate working day-Option of negotiating with employees on alternate days to report to work and the pay is adjusted accordingly. This is yet again an option mostly for employees hired on contract basis on which the contract is not on track as expected due to the pandemic.
Furlough-Furlough in simple terms is to lay off employees on a temporary basis, mostly on temporarily non performing arenas. This could be on no pay or an adjusted pay depending on management discretion. Noteworthy- A possible option but less preferred.
After thorough consideration of the above options, if the organization still needs to reduce its cash burn and the only possible option is employment layoff the option should be exercised through guidelines of a lawyer or an industry expert.
Plan and define ownership, timelines, and document completion of work.
Ensure commitment from the team is always upheld
Demand accountability, do not demand an 8- hour work day, allow team members flexibility in their working schedules but ensure they are accountable on the task entrusted to them.
Ensure individuals are clear about their roles and as a leader you set clear and fair expectation from your employees working remotely.
Two daily stand-up meetings with the team (One in the morning and one at the end of day )
Ensure maximum documentation/proof of work without relying on verbal communication.
Employees to join on video calls which helps improved attention.
Ensure meetings are of two-way communication (Listen to everyone and be concerned on unheard voices)
Engage in activities to understand if everyone is on the call or if anyone has dropped-off/ facing technical issues by pause breaks.
Get the team together on celebrations like birthdays or any other exciting updates.
Send out appreciative emails to boost morale.
If the team has a routine way of working such as work rituals or a start of day with a cup of coffee, try to enact them if virtually as well possible
Do not express frustration in group meetings. Provide personal feedback.
Ensure everyone is clear with their allocated roles by re inquiring from them, do not assume that they might have understood.
By being well versed with the facts, business leaders should play a pivotal role in preparing for the pandemic. Some actions are listed as below-
Creation of a leadership team-Team leaders and Management of the organization to be on it and respond to changes and key matters swiftly.
Ensure “Critical Success Factors” are less hit by pandemic– Critical operational activities, key customer, vendors, markets and business reputation.
Provide necessary infrastructure to “Work from home”-Technological Infrastructure-Laptops, online tools to coordinate with fellow team members, provisions to coordinate with client.
Remote IT help desk if any employee require assistance.
Creation of a centralized back up system for documentation storage, team member reference.
While there is no guarantee that employees will remain unharmed, there are some acts that businesses should enact to ensure the wellbeing of each and every employee as listed below
Frequently update employee on protective measures.
If your job is an essential service
(providing of perishable essentials /pharmaceuticals suppliers/Grocery delivery networks / telecommunication)
As outlined at the inception of this area it is key for business to respond swiftly to keep the “Critical Success Factors” unharmed or at minimal harm. Ways in which this could be done are listed below
Daily or twice a week tracking and reviewing performance.
Re-allocate resources if required.
Meeting with team leaders to discuss on the performance/consideration of plan changes as and when required.
Make information available to public on the areas your firm will be rendering or not rendering services or products during this period (locations served/not served, products served/not served)
If you are to deliver any additional services based on the need of the hour kindly provide all necessary information on the services (book keeping firms, tax consultancy firms can help their clients with services to obtain reliefs issued by the government authorities)
Practice empathy and have transparent communication on collective supports on topics related to the need of the hour. (Tax relief granted, inventory planning advises)
Flexibility in payment plans if requested, but in a win-win situation.
Identify priority of vendors and engage in positive and forward-looking communication (supply chain disruption may be out of his control) and you need to understand and be supportive.
Set up payment plans based on priority, engage in constructive dialogues on possible wave offs, request for concessions
Avoiding inconsistent, malicious information being shared with customers, suppliers, banks and other key stakeholders is a need of the hour and businesses need to stress on confident, firm and transparent communication on the aforementioned areas.
Understand the common challenges face and be humane to work with solidarity on common problems such as payments, receipts, shared services (find collective solutions)
Ensure to deal with utmost professionality, seek legal advice and expert ideas if required so as to ensure business reputation is not tarnished either ways
Constant health updates and blogs on tackling/overcoming the situation with factual information is highly encouraged.
Get the advice of industry experts/other founder members to choose the best option of banks/lending institution that may help you in this process.
If a loan is required prepare a forecasted Profit and Loss, Cash Flow with the advice of industry experts, tax advisors in order to ensure the maximum use of the reliefs are taken into consideration and are in line with required standards.
Provide accurate information on the current business position as opposed to exaggeration.
Get the advice of industry experts/other founder members who have been successful in this endeavor.
Manage cash and liabilities very carefully, especially the key liabilities such as salaries and accounts payable, existing bank loans etc… as these will be the areas an investor will be concerned greatly.
*Communication with stakeholders such as Vendors, Employees were discussed prior
Tax payers who had submitted Tax Return through e-service can upload the TPDF to the RAMIS system.
Others advised to email a PDF copy of the TPDF to the below email id’s
Senior commissioner- (Tax payer services) -firstname.lastname@example.org
Stamp Duty payment and submission of return for the Quarter ended on 31st march 2020 has been extended up to 15th April 2020 for the following parties.
The following changes have been made regarding extension of VAT period
The following changes have been made in regard to VAT Registration.
The following changes have been made in regard to TRC.
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