Steps necessary to preserve your family wealthIf done properly, the plan provides you a framework to be agile and flexible while you pivot your business towards emerging opportunities. It also prepares you to anticipate pitfalls while operating at below par capacity. Your plan need not be perfect but should be nimble and practical. An effective plan, whether brief or comprehensive, will address the following five key pain points for your business:
- You and your family
- Supply chain
Your wellbeingIf you’re stressed or burned out you will undermine your productivity and your leadership of the business. So, plan for health and wellness activities to manage the inevitable spikes in your stress and anxiety. Include time for family via Zoom or FaceTime, exercising, gardening, etc. And what about things on your bucket list that can be done within our quarantine limits?
A business succession planCan your business operate without you for an extended period? Does operation knowledge reside solely with you? Is there someone on your team capable of leading while you are unavailable? Can they communicate with external stakeholders on your behalf? These are critical questions when completing your business succession plan. But are just as urgent today, due to the very uncertain times we find ourselves in. You may be at an age where you are more vulnerable, or live/work in an environment that puts you at higher risk. Solutions should include you revisiting the status and appropriateness of your succession planning, partnership arrangements, power of attorney, insurance, and will.
They are the face of your company, a key source of feedback from your customers and the key to your successful day to day operations. So, plan to overcome any operational gaps caused by one or some of them falling ill or quitting, by taking the following actions:
- Prioritize employees’ health: Your adherence to and preparation of employees to follow Covid-19 public health and safety requirements (PPEs, sanitation routines, safe distancing and testing) will alleviate their fears and anxiety of coming in to work and most importantly, better prepare them to engage your customers. Tweaking or putting in writing your policies to accommodate the health and safety requirements will be acceptable evidence if regulators or a disgruntled employee questions your effort to provide a safe environment.
- Make allowances for staff absences: This starts with cross training your employees, to ensure you have an alternate available to complete critical tasks. And if you employ electricians or accountants, for example, take steps to ensure the alternates have the necessary certifications, licence, etc. Discuss with staff the possibility (or necessity) of rescheduling vacations. And to cover all your bases, consider contracting services out, using volunteers, part-time staff, and retired staff. Start reaching out to these individuals or HR services and gauge their availability and readiness.
- Prevent fraud: Proactively take steps to prevent fraudulent opportunities arising from staff taking on multiple roles while covering for sick or furloughed employees. There will likely be breakdown in controls due to your inability to segregate roles of say, the server and cashier in your restaurant, or the procurement, purchasing and accounting roles in your manufacturing company.
Your business will likely be perennially on the verge of running out of cash. Continuing operations will depend on your ability to cover your fixed operating costs with less revenue from a “slowly returning” customer base. So, plan for transparency and continuous dialogue with your:
- Banks to garner working capital support.
- Suppliers for extended credit.
- Landlord for deferred and / or reduced rent.
- Customers for earlier receipts.
These may be difficult conversations, considering their businesses may be similarly impacted by the pandemic. But providing it is constructive, it could be a win-win for both of you, while extending your liquidity runway.
Plan to repay your accumulated debt.
The CEBA , RRRF and BCAP government loans, mortgage deferrals, supplier and bank flexibilities may leave you feeling like a kid in a candy store, if your business is eligible. But these credit extensions will have to be repaid. So, include a loan repayment schedule in your cash flow budget to facilitate manageable repayments. And there is the bonus of a $10,000 debt forgiveness via the CEBA or RRRF, if you repay these by December 31, 2022.
The challenges the Canadian government recently faced with the faulty KN95 masks supplied from China illustrates some of the problems possible with supply chains during a pandemic. This is particularly concerning when you are unable to guarantee the quality your customers have come to expect. Your current supplier may also have their own quality issues due to the pandemic, leading to them supplying you inferior goods.
As such, plan to:
- Be more vigilant in your quality inspection during receipt of goods.
- Scope alternate suppliers, in the event your current suppliers are forced to shut down because of an outbreak at their plant, or buckles under the financial stress all businesses are now facing.
You should round out your plan with a holistic assessment of your operational readiness, by focusing on the following:
- Your online presence – Was your business fully prepared to sell online at the onset of the pandemic? Are you reliably fulfilling the surge in online orders? Answering these and similar questions will help you deploy necessary resources to adapt to the continuing shift to online transactions by consumers.
- Equipment availability – You will need to pay attention to the reliability of critical equipment such as your welding or molding machine, or for a restaurant, your oven or freezer. And equally important, the availability of the individuals, companies, or alternates responsible for equipment maintenance.
- A leaner operation – Update or document your key procedures, to identify redundant steps in the process that, if eliminated, could lead to you better deploying the skeleton staff you have – “you cannot do differently what you do not know!”
- Alliances with businesses in the community – Consider combined purchases where you and one or more businesses require similar inventories. They may have a better credit arrangement or their supplier may have closed. You may also pool your transportation resources. There are multiple opportunities to leverage each other’s strengths, limited only by your creativity.
- Up to date records – Make every effort to get your record keeping current. You will, in addition to other benefits, be able to justify your eligibility for the various government assistance available to business owners.
Your business continuity plan is your toolkit to help the business stay afloat and restore its value after the pandemic. And ultimately, the restored value will ensure a profitable sale or transition of the business to your successor.
Your success, though, will depend on you continuously monitoring the planned actions and timelines against actual results and refining as circumstances dictate.
Sharing best practices, and bearing in mind that we as business owners are all in this pandemic together, making it up as we go, should necessitate us sharing among ourselves, what worked and did not work in the implementation of our plans, which will improve our combined response efforts.
To learn more about how our Business Solutions may positively impact you maintaining your business viability and restore its value, you may connect with me for a FREE 30-minute no obligation consultation.
Effectuation Optimum develops these and other management strategies for business owners to help them preserve their family wealth through developing and executing their business succession plan. Business owners who opt to partner with a professional will position themselves to systematically overcome and grow from these challenging times.