The American business landscape is very different than it was just a couple of months ago.  As confirmed coronavirus cases continue to rise, so do the number of individual cities and states mandating the closure of certain types of businesses.  It has been suggested that these restrictions will be necessary for several more weeks, possibly months.

While we are unable to control the current state of coronavirus or new regulations from the federal and state governments, we do have the ability to control how our businesses, and we as individuals, react.   Whether you are still up and running or have been forced to completely shut down, now is a prime opportunity to reevaluate your business. The way we see it, you can surrender to current circumstances or you can figure out how to weather the storm, learn the lessons from this situation, and prepare for the future.

Below are ways to prepare your business to be more resilient during coronavirus and any future disruptions.

Sometimes the positive aspect to difficult times such as these is it forces you to see things differently, personally and professionally.  In both regards, you are likely realizing there are certain things you really can’t live without.  You’ve probably also discovered there are a great deal of things you once thought were vital but, you can live without.  It is a great time to apply this perspective to your business and review all your expenses. Do a thorough review of every expense, no matter how small, asking yourself how you can reduce, cut back, or eliminate it altogether.  At Smirnova Business Consulting, this is an exercise we recommend being done at least quarterly even in the best of times.

The cost of the office is often one of the largest expenses for a business.  Not every business has the option of conducting business remotely but, for those that do, now is the time to learn the lessons from COVID-19.  There were many companies and many individuals that felt strongly their work and their business could not function without a central office space.  Yet, due to the coronavirus, a great deal of the country is now learning otherwise.

Now is the time to consider moving to a fully remote model and getting rid of an office space altogether Alternatively, you could move to a partially remote model and move to a smaller, less expensive office space.  Given the terms of your lease or if you have a business mortgage, this won’t be able to be done immediately but, you could start taking steps now or begin preparing to transition in the future.

At SBC we are strong proponents of the idea often touted by CEOs like Richard Branson, “take care of your employees and they will take care of your business”.  However, as business consultants, our first responsibility is to your business and sometimes, you must cut payroll expenses to stay in business or risk jeopardizing the positions of all your employees.  In no way are we recommending you immediately begin firing staff.  We sincerely hope that the outcomes of coronavirus have not already pushed you in that direction.

With that said, now may be the time to consider restructuring some positions to freelance or contract roles. This doesn’t necessarily mean firing existing employees either.  Many employees are likely to learn from this pandemic how much they enjoy working from home. They may also find improved cash flow now to be more important than tax considerations down the road.  In many cases, you’ll be able to offer them a remote or partially remote position with a higher base pay than what they currently receive and still end up realizing considerable savings due to no longer being liable for payroll taxes or benefit expenses.  If you are candid with your employees that you want to transition their positions to help keep the company afloat, and are willing to come to an agreement that mutually benefits both parties, you may be surprised how many employees will be inclined to make the switch.

Let’s say you cut expenses and revenue returns to normal.   Your first instinct may be to start reinvesting those additional profits back into your business.  This typically means taking on new expenses or liabilities to grow the business.  Of course, that is a good idea and generally recommend but, it should be balanced with other considerations as well.  If coronavirus has shown us nothing else, it’s that life is unpredictable, and circumstances can change quickly. Businesses, like people, should have savings equal to several months’ expenses.  A contingency fund should be an actual line item on your financials that you plan for and manage through the course of your regular business planning.