The coronavirus is going to impact your business. South Korea has had a massive spike in cases. One Korean car company shut down manufacturing due to an infected worker. Japan has closed schools for one month. When that happens at least one parent can’t go to work. We are going to see similar actions and impact in the US.
In the US, travel is being restricted, companies (like Cisco) have started layoffs (due to economic headwinds). (Note: I’m not saying Cisco is laying off because of the coronavirus, but I’m also saying they’re really smart about financial projections.) Companies and individuals used to have a lot of cash to spend. That’s changed overnight with the massive drop in the stock market. Whatever business you’re in, you will be impacted.
My strong recommendation is that you gather your senior management team together (virtually is fine) and you conduct a brainstorming / planning session immediately. Do some scenario planning to address the question of what would happen if the US economy essentially shut down for a month or more. How will that impact the company? How will it impact your employees? Your customers?
Carefully consider the impact on your financials and prepare to take action quickly.
The impact of COVID-19 is likely to become significant to your short-term financial performance. Based on current trends, the virus appears to start slowly and then spike within populations. That makes projections of impact challenging.
Here are some of the reasons your short-term performance may be impacted:
Supply chain disruption. Some companies rely on Chinese companies in part of their supply chain. Many of these Chinese companies are temporarily closed or have significantly slowed production.
Slowing demand. When schools close, one or both parents stay home. When families stay home, they spend less. When companies restrict travel and/or encourage employees to work from home, travel-related expenses decline. Overall, people are spending less, and some companies (potential customers) are cutting expenses.
Reduced sales opportunity. As people travel less (even locally), the sales process slows. Prospects and customers will be more reluctant to have in-person meetings. Sales reps will be less willing to visit customers. Many large networking events where employees spend time with prospects and vice versa, are being cancelled.
Then, share with your employees what you are doing. Here are some tips:
- Encourage them to work at home starting now. They may need time to get things set up properly.
- Teach them how to work at home. It’s different and for some, it’s difficult.
- Ban anyone from the office who’s feeling sick.
- Provide basic information on how to prevent the spread of this virus (washing hand frequently with soap, not touching one’s face, not shaking hands, etc.)
- Have your employees determine what the company can do for your customers and offer that now. You have a unique opportunity to serve your customers when they need it most. Do that now.
- Eventually, share with them the results of your scenario planning. Be honest with them and help them prepare if they’re negatively impacted.
Whether you think this will be a really big deal or not, as a leader, you need to be prepared. Hope for the best and prepare for the worst.
If you want to discuss this with me, grab some time with me via calendly.com/glenngow, or just email me at firstname.lastname@example.org