Endeavor is an entrepreneur support organisation by and for entrepreneurs. Given the current situation, Endeavor hosted an urgent webinar to discuss best practices on how entrepreneurs should weather through this storm.
Over 60 entrepreneurs shared and discussed key priorities, best practices over the webinar. Here are our key takeaways:
On main priorities to address:
· Role in Isolation
· Role as Debtors & Creditors (Cash flow)
· Traditional BCP
· Employee Welfare
Role in Isolation
Establish a close contact list of anyone who displays symptoms of COVID-19. Definition of close contact = 2 metres OR interaction lasting more than 15 minutes. The starting date of the list should be 14 days of pre developing symptoms. Put it all together, contact the Ministry of Health, and email the contact list out.
Some companies shared that they’ve closed offices 2 weeks prior to the ‘lockdown’ as part of a ‘Rational Overreaction’. We did this because:
○ It is a civic duty & responsibility
○ Prevent any kind of spread
○ Test BCP 2 weeks in advance
This is a 1 in a 100 years occurrence so we need to respond accordingly with extreme measures
As founders/ CEO, 2020 is a write off as consumer spending is affected and won’t recover anytime soon given the stage of the outbreak
Role as Debtors & Creditors (Cash flow)
There will be a liquidity crunch so #1 focus should be on cash flow. Create a daily 3-scenario simulation for the next 3 months:
○ #1: 3 months without zero cash coming into the business
○ #2: No operating cash flow (cash flow cut by 50%)
○ #3: Cash flow is cut by 25%
Defer all non-essential spending (expansion plans, new office, printing press, warehouses etc.) to conserve & inject cash back into daily operations and to fulfil customer receipts
Understand how much cash you have now:
○ Call banks to understand how they can help you (they’ve learned in the past that Central Banks will ease loans/ relax non-performing loans)
As CEO, list out all cash in & out (payouts, net cash) of the business onto an Excel sheet to understand what sucks the most cash
Prioritise payments – you must make all statutory payments (EPF, Income Tax Deductions) first before paying secured creditors (banks), unsecured creditors, and trade creditors and so on.
This is not your usual BCP where there’s a flood or when a group of employees fall ill – this situation has 5-6 negative elements i.e. consumer sentiment, work from home, supply shortage, offices closed, limited travel etc., that form a perfect storm.
BCP will test team diversity & premise diversity – you will understand the overabundance of office space you have given that you have to carry on work with offices being closed.
You have to always prepare for an infection to hit your workforce so you need clear processes
○ Split teams & sites into two groups – Team A & B, Site #1 & #2; do not allow both teams to come in contact with each other at any location & time e.g. toilet, surau, canteen.
Have a conscience – pay cuts are only done when entering survival mode; it is highly irresponsible to cut employee costs to improve operational metrics e.g. profitability.
There are many steps you can take before initiating pay cuts or voluntary leave e.g. reduce advertising, cut non-essential expenditure.
If the business is at risk of closing down/ further retrenchment, have discussions with employees across the board on voluntary time off or pay cuts (this is between employers & employees and requires full and genuine consent)
Speak to your board and align them – the business should be going into survival mode and short term growth should be sacrificed to ensure the company survives
For B2B businesses – everyone is going through a cash crunch so you need to profile your clients on how essential your product is to them. Work around it by initiating virtual discussions, manage client expectations and relationships.
Review your position when negotiating with suppliers/ partners e.g. ask for rental subsidies for the next 3-6 months, malls are empty moving forward and they won’t want to lose tenants & will find it hard to replace tenants.
Endeavor is a global entrepreneur support organisation that spans across 37 markets. We help entrepreneurs grow and scale by providing them access to mentorship, talent, capital & markets. To learn more, click here.