The current circumstances have had a major disruptive effect on business operations around the world. Many countries have imposed lockdowns to various degrees, limiting movement locally and internationally. Add the fact that markets (stocks, futures, bonds, etc.) have seen tremendous levels of volatility in many countries and businesses around the world are facing an unprecedented situation both in terms of present and potential impact on future operations.
Still, business must go on in one form or another. Although some industries are harder hit than others, all companies will have to take proactive steps to minimize the negative impact of this crisis and come out on the other side stronger. Here are three major areas where action is essential now.
1. Contracts
Whether it’s contracts with suppliers, clients, partners or any other third party, there is a higher chance that contractual terms will be breached as a result of all the disruption that’s taking place. These breaches are dangerous because they could cause a ripple effect and potentially cripple business operations. For example, where a supplier fails to deliver the material you need to manufacture your products for onward delivery to clients whom you have contractual obligations to.
At this point, it’s crucial to get in touch with all persons you have a contract with to confirm what their status is and if they will be able to continue. You might also be the party who is unable to fulfil your side of a contract, so be sure to have an experienced legal practitioner review all your contracts to see exactly what your obligations are in each one of them.
Depending on the nature of the contract and how your business operations have been impacted by the pandemic, you might be able to invoke force majeure to relieve your business of potential liability. As defined by Cornell University, it’s “a provision commonly found in contracts that frees both parties from obligation if an extraordinary event prevent one or both parties from performing.” Be sure to get a professional opinion before taking any steps on this though, as there are a few conditions such as making effort to mitigate the disruption and giving notice in due time.
2. Remote Work
Employees are the lifeblood of any business, and keeping them safe, happy and productive is key to achieving success. Depending on where you operate, there might already be restrictions that mandate you to allow your employees work from home or to give them paid leave. Compliance is essential, and as quickly as possible.
“Apart from complying with the law, a failure to take the appropriate steps to keep your employees safe during the pandemic might also open you up to liability for negligence and for any illness your employees may suffer as a result” says Simon Lai, CEO of Vaporesso, a company that has more than 10,000 employees, “Nonetheless, be sure to see if your industry or business has been listed on the exemption of essential services, or you should apply to open so you are able to modify your operations and continue moving forward. In returning to the office, the key is to ensure that beyond the minimal standards set by the government, you make fundamental changes to promote employees’ health, even if it means redesigning the office space. Most of our meetings have been moved online, including global workshops that we used to travel around the world to.”
To make the most of remote work, organize a tutorial for your employees and use video-conferencing software to hold meetings. You might also want to consider using a time-tracker app to ensure that your employees are working as they should, although that should be a last result since it can often engender resentment.
3. Sales Fluctuations
Unless your business is one that gets a boost from people spending a lot of time indoors (such as Netflix), it is likely that you will have to deal with a reduction in sales as a result of the pandemic.
Many businesses are trying to reverse that trend by offering discounts to customers, but that might not be the best idea, especially in the long-term. No one really knows how long these lockdowns will last, so discounting your prices now might lead to a downward spiral where you begin competing solely based on price with companies doing the same, as highlighted in this research paper by KPMG.
A better strategy, summed up by Landon Dash, CEO of Vapocorner, is to consider upping your marketing game. “It’s a much better approach to communicate the value of your products and services while adding new bonuses and relaxing your terms (return policies, for instance) instead of outright price reduction. You should also focus on building up your sales system through virtual training and mentorship to enable them leverage technology better to get more sales without diluting your brand equity.”
The post How to budget money: Tackle your debt and start saving appeared first on Entrepreneur and is written by Ademola Adekunbi
Original source: Entrepreneur
