Checklist on how to cope with the coronavirus crisis
The crisis caused by COVID-19 has a direct impact on any company and its future existence. This article is a check-list on how to cope with the problem now and for ever.
Executive summary:
1. Action plan should be based on data and facts (P&L, Cash flow and their scenarios)
2. Crisis team must be formed. It should be a team effort, rather than top management decisions.
3. Be human and protect jobs, if possibile.
4. Crisis team should meet weekly to evolve dynamic development of the situation and to react accordingly.
5. Win-win solutions with clients/customers and suppliers will pay off in the future
6. Prepare emergency plan for the future, including remote work
7. Evaluate all business opportunities during and after the pandemia proactively.
8. Transparent, internal and external communication is a must. Get employees involved. Talk openly and directly with your partners and customers. Do not guess.
9. Think about conclusions for your strategy with provision that COVID-19 problem will not disapear.
The following is a summary of activities for start-ups and SME to Wight the current pandemia crisis.
Company’s Diagnosis
Profit and loss analysis ( P&L )
Influence of the coronavirus on sales in channels, categories, customer groups, countries, Business Units, etc.
Gross Margins
Fixed costs
Variable costs
Analysis of profit centers
Cost evolution analysis (e.g. purchase of materials for production)
Simplified Cash Flow
Applying P&L changes to the cash flow file
Available cash and company’s bankability
Identification of negative cash flow in months
Impact of State aid on P&L and cash flow
Application of government assistance in P&L and Cash flow sheets
Customers and suppliers (direct contact recommended!)
1. Evaluation of procurement options
2. Determining the possibility of selling to each customer, credit policy and the probability of obtaining payment
3. Bank credits (e.g. verification of current credit terms, increase of credit limit, suspension of payments, etc.)
Examination of the emotional state in the company and readiness for adaptation
Owner
Management team
Employees
Contractors
Conclusions to functional departments and company’s matrix
Finance
1. Development of 3 scenarios in P&L : moderate, pessimistic, very pessimistic
2. How long will the company survive without doing anything?
3. Possible costs cuts without undermining ability to sell
4. Necessary payments
Sales
1. Elimination / reduction of barriers for sales affected by the COVID-19 crisis
2. Evaluation of market opportunity for selling the company’s current product portfolio
3. New products/services that can be developer and sold, based on current production capa city
4. Setting win-win conditions with B2B clients
Operational costs
1. Costs to be renegotiated with landlords and suppliers
Marketing
1. Marketing activities necessary to strengthen „virus-resistant” sales
2. Marketing activities needed to build the future sales
Back office
1. What company activities can be done remotely?
2. Organization of remote work (tools, access, tasks, accounting, motivation, communication, etc.)
3. Security precautions at work
4. Compliance of action plan with the law
HR
1. Key people who need to be maintained within ½ year and their cost
2. Determining the salary and bonus package for employees during the crisis
3. Determining the methods of psychological and substantive support for the company's staff
Internal communication
1. Involving managers and selected employees in the preparation of the action plan
2. Establishing the principles and tools of managerial communication with employees
3. Checking the steps considered for compliance with the law
4. Organizing a remote or secure personal meeting with the crew to provide an open diagnosis of the situation, organization of the company and actions taken
Preparation of a 3-6 month action plan
1. Formal establishment of an inter-departmental crisis team
2. Setting priorities
3. Assigning individual responsibilities to tasks with deadlines
Action plan implementation
1. Monitoring the progress of the action plan on a minimum weekly basis
Analytical reports to monitor the progress
Task completion weekly reports
2. Urgent responding to deviations from the plan
3. Modifying plan assumptions as the situation develops (minimum 3 months ahead of modification date, preferably till the end of 2020)
Strategy after the Covid-19 crisis
1. Systemic and innovative solutions, which will allow the company to get out of the crisis faster and gain competitive advantage in the future
2. Development of action plan for the future in case the coronavirus pandemic recurs