Conclusion
Most start-ups and micro, small and medium enterprises are generally not ready to shift into a prolonged ad hoc emergency measures to address the challenges brought about by the Covid-19 crisis. These businesses will have to immediately simulate and stress-test their business models and operations and prepare for a potential need to shift to these ad-hoc
operational arrangement under a contamination situation.
While developing business continuity plans at this stage and contagion rate is not realistic—the following immediate actions will need to be taken by founders and business owners:
1. Stress-test and simulate a contamination event within five calendar days to determine the optimal next course of action, this would normally require the involvement of key persons within the company across the ranks to ensure that plans in place are realistic and can be executed.
2. Stress-test and simulate the company’s profitability and cash flows using pessimistic assumptions relevant to the company, such as a total stoppage of the supply chain, a 90-perent drop in walk-in customers, a shutdown of local banks limiting monetary access to ATMs, and other relevant assumptions.
3. Stress-test and simulate an infection event of key persons and founders within the company to determine how the business can continue to operate in the absence of these key persons on a prolonged period of time.
4. Develop short written policies that will be deployed to all employees in a contamination event and how telecommuting arrangements will be followed. This should likely be developed together with key persons of the company as well as human resource specialists.
5. Check the company’s medical insurance (or health maintenance organization) policy and employment contracts to ensure that affected employees are provided with the right medical attention and monetary compensation as legally required. Some insurance companies have begun to introduce additional benefits to policyholders in light of Covid-19.
In times of contagion crisis, business continuity is more important than growing the market base of the business (exception to those in the business of crisis management, medical research or other relevant industries). Businesses are expected to cut-down operating costs during these periods to avoid spiraling down into bankruptcy in these volatile times.
After all, we can never be fully prepared to face all the risks that are yet to come in the coming days—we can simply hope and pray that all will be well.
Filbert Tsai is a Certified Public Accountant and is the chief strategist at UpSmart Strategy Consulting Inc.
This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.
1 comment
Can I please speak to the website manager, just have a question.