Preparing your business for a potential second wave
Many doctors, epidemiologists, and other experts believe Canada will see a second wave of COVID-19, based on the history of infectious diseases. While there isn’t a precise definition of what will constitute this wave, we’ll know it’s here when we start to see a continuous rise in cases.
In the fall, as schools and more workplaces reopen — combined with cooler temperatures that keep people indoors — we could see a resurgence of the virus. Many businesses that were hard hit during the first lockdown worry that they won’t survive a second lockdown. That’s why it’s critical to prepare now, should new restrictions or another lockdown occur.
There are several resources available to help assess your current situation and take action for the future. For instance, the Canadian Federation of Independent Business (CFIB) has a COVID-19 Small Business Help Centre that addresses questions around business continuity, financial support, and human resources.
The Canadian Chamber of Commerce has launched the Canadian Business Resilience Network, where you can find tips, advice, and toolkits, as well as a centralized listing of federal, provincial, and other financial assistance programs. The Business Development Bank of Canada (BDC) also has several COVID-19 resources such as blogs and webinars with advice on sustaining your business through disruption if a second wave does, indeed, occur.
Assess your response to the first wave
There are lessons to be learned from your response to the first wave. Talk to employees, partners, and suppliers to find out what worked and what needs work. EY Canada (formerly Ernst & Young) suggests that businesses review their business continuity plan: “If there are deficiencies, companies will want to identify root causes, whether it’s timeliness of action, lack of infrastructure, labor shortages, or external environment issues.”
Smaller businesses might not have a business continuity plan, but it’s important to take some time to assess what caused issues or bottlenecks during the height of the first wave and what would have allowed them to get back up and running faster. Small businesses should consider the reliability of their vendors, their ability to store inventory, their access to skilled people and their ability to adapt manual business operations to a digital one. Business model resiliency will be a critical factor in surviving future waves.
Did you experience inventory issues or workforce disruptions? Did you have enough personal protective equipment (PPE)? Were you able to pivot your business to continue bringing in revenue? When you’ve examined your response to the first wave, draw up new policies and procedures to reinforce what worked and fix what didn’t. Also, keep up-to-date with the latest regulations and best practices on COVID-19 prevention in the workplace.
Prioritize employee safety and communication
Your employees are your lifeblood, so ensuring their safety and wellbeing should be a top priority. “People are looking to their employer, community and government leaders for guidance,” according to EY’s COVID-19 business continuity plan. Addressing their concerns “in an open and transparent manner will go a long way to engaging them.”
Ensure you’re following all federal, provincial, and municipal guidelines for keeping employees and customers safe. Beyond this, assess your organizational risk — some businesses, such as restaurants and retail shops, have greater exposures than others. Also, apply learnings from the first wave so you’re better prepared for the unknowns that lie ahead.
Stock up on essentials
While you may be purchasing PPE, hand sanitizer, and cleaning supplies to meet current requirements, you don’t want to be left scrambling if cases start to rise and there’s a subsequent lockdown. Start buying essentials or seeking out reliable suppliers now to avoid the rush that may come with a second wave. You’ll still need these essentials if you’re offering pick-up or curbside delivery during another lockdown.
Get your finances in order
“Companies should generally approach things with the mentality that the subsidies are going to end and that revenue isn’t going to come back — so there’s no reliance on revenue that might not be there,” says business consultant Eitan Dehtiar in an article for CPA Canada.
With this in mind, businesses should have a financial cushion. But Dehtiar acknowledges that many smaller businesses don’t have the funds for this, particularly after the loss of revenue over the past few months. He suggests “looking at an overall cost reduction plan, trying to transition as many fixed costs as you can to variable costs so that you have the ability to turn off the tap and adjust.”
EY suggests that businesses evaluate their short-term liquidity and closely monitor cash flow to stay on top of potential shortfalls, tighten up receivables collection and manage inventory buildup. And accounting firm Grant Thornton recommends switching to a receipts and payments method of cash flow, conducting regular forecasts, and stress-testing those forecasts to “gain better clarity on the sufficiency of your liquidity.”
Consider altering your business model
When surveyed in June for PwC’s sixth COVID US CFO Pulse Survey, chief financial officers reported that “the ability for businesses to return to pre-COVID revenue levels is predicated on how they can adapt and be agile in this new environment.” Sixty-three per cent of respondents anticipate that changes in product and service offerings will be the most important part of rebuilding or enhancing their revenue streams.
According to BDC, too many small and mid-sized businesses are focused on a single product, service, or market, which puts pressure on the business, especially during a global pandemic. Consider exploring adjacent markets or new products and services for your existing customer base. During the first wave of the pandemic, for example, fashion designers started creating masks and distilleries started producing hand sanitizer.
BDC also recommends ensuring resiliency in your supply chain. “For decades, we’ve been sourcing from, and outsourcing to, more cost effective and remote countries,” says Leon Van Der Poel, senior business advisor with BDC Advisory Services, in a blog. “Some of the recent lessons learned include the advantages of a more regional element in the supply chain for business continuity purposes.”
Improve your online presence
From February to May, total retail sales in Canada fell 17.9 per cent but retail e-commerce sales increased 99.3 per cent over the same period. With lockdowns and shelter-in-place orders at the start of the pandemic, consumers moved online in record numbers.
So, if a second wave occurs, your business should be ready with a beefed-up online presence. You likely already have a website, but you may need to roll out an e-commerce platform that allows you to sell products and services online, depending on your type of business.
Startup Nation points out that a number of service providers, including Shopify, Wix, and Squarespace, make it easy to get started with e-commerce at a reasonable cost. It also points out that it pays to put some work into branding and that you need to “get your shipping department in order” and “set up your marketing, especially paid search.”
BDC has several resources to help you get set up online and move to e-commerce. Beyond an online presence, you might want to consider embracing digital in other areas of the business. Many small and mid-sized businesses, for example, rely on manual, paper-based processes. “These processes will break when people are not in the same physical space, nor do they scale, which also limits the company’s growth potential,” says BDC’s Van Der Poel.
Prepare for the ‘new normal’
Preparing for a second wave also means preparing for future pandemics. Infectious disease experts warn that COVID-19 may not be the only global pandemic we experience in our lifetime. Some of the changes you roll out now may become part of the ‘new normal,’ such as physical distancing in retail and entertainment venues.
A second wave isn’t inevitable, but it is likely. Being prepared, getting your finances in order and adapting your business to new online realities can help you better weather the storm.
To learn more about how to help protect your business during a pandemic, visit our COVID-19 Business Resources page or sign up for a free risk management training program designed to help you understand how to create a plan to control infection exposures.