Executive Insights: Coronavirus and Your Business
So far during this crisis, we have had the worst day on Wall Street since 1987 and sophisticated companies are unable to predict earnings beyond the first quarter. It is clear the 11-year expansion is over for the balance of 2020 and the coronavirus is here, whether we like it or not.
As the former General Counsel of a Fortune 200 company and two other large public companies, I can tell you that your customers and their attitudes towards needs, spending, and risk, have all changed – perhaps in a fundamental way. As such, your organization needs to adapt to this reality and the new environment of doing business in the face of a global pandemic with an undefined endpoint. Business leaders should consider the following:
#1 Stay informed. There is no one good source of information. The Center for Infectious Disease Research at Policy at the University of Minnesota is a highly-respected source that is updated daily: http://www.cidrap.umn.edu/
#2 Have a work from home plan for your employees and associates to the greatest extent possible. The working assumption of ALL state public health officials is that COVID-19 is everywhere.
#3 Consider creating a Pandemic Risk sub-committee that will serve as experts for the Board as quarterly results are assembled and understood.
#4 Look at your strategic plan and decide whether it still applies in the face of a restructured marketplace – have a staged cost-cutting plan for moderate to severe conditions and assume that normal operating conditions will not return for 12-18 months.
#5 Limit travel to only essential and critical company business.
#6 Communicate daily with your employees and associates – an information vacuum will be filled with negative assumptions.
#7 Have a plan in place if someone tests positive for COVID-19 – support your employees if they are feeling sick and visit the doctor.
#8 Encourage planning for employees with families that have school-age children if their school is closed.
#9 Call your key customers and ensure them you will be their partner through the COVID-19 crisis.
#10 Consider the force majeure clause in contracts and your business interruption insurance cover – consider whether customers can cancel their contract under the force majeure clause and if your bank and/or others can cancel their obligations based on a force majeure clause. Take a look at your business interruption insurance and see if it could be applicable during an outbreak.
#11 Examine your supply chain and make sure you have an alternative supply for essential raw materials.
#12 Large gatherings will likely be cancelled for at least the next 90 days and no time should be spent planning or attending such events – consider virtual board meetings and other management-level meetings.
As we go forward, stay calm, and take a balanced view of risk. We take significant risks every day and think nothing of it. Understand that COVID-19 is a heightened personal risk, especially for those who smoke, have diabetes, are obese, or other respiratory sickness, but life should not come to a complete stop. Make decisions for your teams based on information. The big difference between today and the 1918 Spanish flu is that we know what we are dealing with. In 1918, they didn’t even know what a virus looked like.
If we can be of any help during this critical time, contact your FMJ Relationship Manager via email or by calling our office line at 952-995-9500. We are here to offer pragmatic advice so that you can keep your employees, your family and friends, and yourselves healthy and safe.