How To Survive The Coronavirus Crisis And Keep Your Company Alive
In this article, we take a hard look at the how innovative companies should face this global crisis arising from the Coronavirus or COVD 2019 outbreak and take the necessary steps to tide over this global crisis.
The Management must take a hard look at the legal ramifications arising out of this crisis which came about in an already volatile global business environment. The crisis, like all others before it, will eventually blow over and markets will rebound. And inevitably this crisis will make asset prices drop and provide the right opportunities for acquisitions and expansions.
Its not the end of the world and markets will rebound:
Its not the first crisis nor the first epidemic, nor will it be the last. But entrepreneurs should keep a cool head and not get carried away by the panic in the markets. The key is to steer the company away from potential rough spots and tide over stormy waters till the storm blows over in the coming 12-18 months.
Its better to be prepared for it:
But till the crisis persists, it is best for companies to hold out. Companies will eventually have legal obligations, and they are expected to comply accordingly. And after the crisis gets over, there are statutory compliances and legal obligations which the company will have to account for in the courts and offer suitable defense for any shortfalls in compliance.
These are some of the ways in which companies should shore up their defenses and take the necessary steps to safeguard themselves against this global outbreak.
- If planning to cut the burn rate this is the time to do it: With the price of the Brent crude dropping to historic lows, due to OPEC giant, the Saudi government, taking steps to increase production, the markets immediately tanked, which significantly impacted crypto markets as well as having a ripple effect on the global financial markets. The oil price crash immediately put the US shale oil industry in deep trouble and some of them might become bankrupt, having wider consequences for the global economy.A company must therefore be prepared for a period of gloom and adverse business conditions. Companies should not wait for a turn around and if past epidemics have anything to go by, 12-18 months, is the minimum time to recover. A pharmacological cure is a distant prospect and a company should be prepared for expensive employee health insurance. Companies should let go of expensive office space, reduce office expenses and travel and get rid of other dead weights.
- Its time to close the deals: The investment markets are shell shocked with a global oil crisis looming and with falling markets investors are skeptical of making new investments. The crisis will cause deal breaks, startup layoffs and delayed mergers and acquisitions in the tech space.In this crisis a company must accept a suboptimal deal if not an outright unacceptable one. If there is a deal on the table, be it a venture capital, financing with less than acceptable terms, its best to take it. Any short term fluctuations would pass over and a company must close deals wherever available, this is crucial for its short term survival. This same principle applies to closing customers and orders, its only a short period until markets rebound. Investors act on a herd mentality and they are shying away from the markets at present.
- Companies must review their firm’s insurance: Comprehensive insurance plans against the coronovirus and related turmoil is not currently available. Some insurers might have them but its mostly not available. A large company might want to put out a basic coverage policy in the short term. It’s important to put out certain level of cover in place, like general liability insurance which comes as a pre-requisite in certain contracts. It’s imperative that companies review policies which are already in place. It is advisable to find an insurance policy which applies to coronavirus related loss.
- Protect the employees: The most important priority is to secure the health and wellbeing of its employees which is the duty of the management. It is important for companies to secure and update the health insurance for its employees and provide a comprehensive coverage. The company can also implement office quarantine protocols according to government health department directives. These are important since failing to keep employees safe from an epidemic may result in the sickness or death of the employee, possible onward transmission to third parties and enduring adverse health consequences for themselves, the business enterprise, and the society at large. It’s imperative that the company puts in place policies like around halting staff travel, staggered off-peak commuting, modified paid sick leaves, a disability cover, and working from home initiatives. It’s important that the management communicate these policies to their staff with the topmost priority. A slight reduction in productivity and face time in the office will however translate into saving lives and protecting the wellbeing of the workforce.
- Its important to review and restructure employee contracts: Its important for companies to review their agreements with suppliers, review lease agreements and procurements which cost the company significantly. If the asset or agreement is found to be absolutely unnecessary, or which the company can do without, there are clauses in the contract which allow companies to terminate them or review them.
Companies may invoke certain terms in their contracts if the clauses for dealing specifically with the coronavirus is not possible. They can also revoke express early termination provisions in the contract and look at all available options. If they are unable to revoke these contracts it might be possible to approach the other party to restructure the deal. A mutually agreed deal is advisable as against a long drawn out litigation.
- Its imperative to put in place a chain of command to deal with any unforeseen events: Its important to have a diversified management structure so that enterprises may get over the outbreak situation. A well planned and structured corporate hierarchy is essential to tiding over an adverse situation like the present outbreak. So that, an individual or a number of people remaining absent from the organization do not significantly affect the performance of the company as a whole.