Business survival plan for COVID-19

Business survival plan for COVID-19

Some considerations for placing your business on a war footing to steer through choppy waters over the next 6 to 12 months.

Financial Forecasting

  • Your business needs to prepare for significant interruption to your business.
  • You should prepare 3, 6, 9, 12 month forecasting scenarios, stress testing revenues at various rates of decline. Be ready for reduced revenue over several quarters.
  • Be prepared for potential breaks with suppliers. Unfortunately not every business will be able to survive this period.
  • Where revenue is to be disrupted prepare for medium term mitigation actions.

Increase any available cash 

  • Collect all receivable debts, and consider reducing amounts owed to increase cash in the bank.
  • Apply for government grants.
  • Consider new bank loans.
  • Look at business interruption insurance.

Whatever the deal is, close it – now

  • Where there is a deal on the table on less than ideal but acceptable terms: take it. Now is the time to close on commercial transactions that may keep your doors open and bring in capital.

Reduce Expenditure

  • Reduce payroll (consider leave without pay, part time work, options instead of wages).
  • Defer payment wherever possible.
  • Negotiate for a rent reduction or deferral.
  • Restructure debt repayments on existing loans.
  • Adopt a zero-based budget approach: start your budget from scratch to reconsider processes and identify new efficiencies.

Review contracts with suppliers

  • Look at all contracts the business has with suppliers. See what can be renegotiated, updated in light of COV-19 implications.
  • See if any contracts can be broken or renegotiated on force majeure clauses. Manage risk by including epidemic wording into new contracts.
  • Where COVID-19 has interfered with performing the obligations of a contract, there may be common law remedies available (eg frustration). 
  • See what can be renegotiated informally. 

Insurance

  • Where you have insurance in place, review your policies. You may be able to claim for a COVID-19 related loss.

Look after your customers and team

  • You will need them both once this period has ended, and dealing with them with empathy, trust, and transparency will go a long way.

Draft a recovery plan

  • Prepare how your business will be placed to bounce-back into recovery
  • Work out how employees can be brought back into the workplace
  • To the extent possible, have funds available for marketing when the time is right.

About Ezra Sarajinsky

Ezra SarajinskyEzra is a founder of OpenLegal. Having spent the last decade working with startups, small businesses and corporates, Ezra is evolving a client-centric experience that tightly integrates digital technology with project managed services. His legal focus is employment, corporate and migration law.