Coronavirus: What does it mean for your business?

Perhaps the most frequent conversation I have had this week has been the ever increasing anxiety that Coronavirus is causing business leaders. The question being asked is, “what does it mean for my business, what will the financial impact be and what should I be doing about it?” Sadly, if you don’t have or have not considered contingencies around business disruption or disaster recovery in your business, it is likely you are feeling a heightened degree of anxiety at the moment.

Without doubt, as a result of Coronavirus, most if not all businesses will suffer some form of disruption ranging from being minor in nature to catastrophic in nature. Some impacts will be immediate and some will be long term. How Coronavirus impacts your business will depend on so many factors and critically, the command decisions you make as a business leader will significantly influence the outcomes those disruptions will have on your business.

Being a pilot, my mind started to drift toward equating the situation that confronts business leaders right now to those that would confront a pilot when inflight situations begin to emerge on board an aircraft which could threaten the safe passage of a flight.

In all phases and all conditions of flight (including emergencies), a pilot is taught to Aviate (fly the aircraft), Navigate (steer the aircraft on the planned course at the planned or a safe altitude) and Communicate (tell other aviators and air traffic controllers what your intentions are). In normal flight, this will generally happen without much consideration or thought. Much like running your business on a day to day basis. It just happens.

However, when an emerging threat appears, and depending on the severity and rate of onset that the emerging event occurs at, quite often these basic practices can be ignored as a result of too much focus being put on the emerging problem rather than continuing to fly the aircraft. This is often heightened when a contingency plan has not been considered or practiced regularly before.

The same applies in business. Coronavirus is something not to be ignored, much like an engine that has failed on an aircraft.  Coronavirus in most cases won’t prevent your business from operating but it is likely to significantly impact its performance.  The failure of the engine on an aircraft inflight in most cases won’t prevent the aircraft from flying but it will significantly impact its performance. The outcome of that inflight event will be impacted by how you handle that event, the actions taken and the decisions made. The success of the outcome is mostly in the pilots hands.

Just like pilots, business leaders need to determine an action plan to deal with the impact Coronavirus will have on their businesses, both financial and non-financial. One concern I have is that recent research has shown that most businesses have not considered the non-financial risks that impact their business and close to 75% of all SME’s do not have sufficient cash reserves to deal with any form of shock or disruption.

What is emerging is that the likely economic impact of the Coronavirus disruption be will be real and significant. Consider the financial impact that crowd-less sports matches will have on the codes, the clubs involved and the many businesses that support those events. Then consider the flow on affect. If we take the food providers, they won’t need to pay the casual staff or purchase food supplied at the events from wholesalers. That then moves down stream all the way to primary producers.  That all takes money out of the economy that at some point will impact your business and its financial condition.

Notwithstanding the proposed Federal Government Stimulus package, the real question to ask is, what impact will a progressive financial slow down have on your cash-flow and your medium term business and financial viability. Just like the pilot of an aircraft who is confronted with a disruption to their flight plan though altered performance of their aircraft, what command decisions will you take? How will you continue to manage your business with slowing turnover, reduced staff and capacity due to self-quarantine requirements or the need to look after young children who may not be able to attend school? How will you manage suppliers who may not be able to supply you as a result of a disrupted supply chain?

Will you be able to maintain your current business plan and what steps will you need to take to protect your income stream and your business value?

Pilots have two communication phrases that they use to advise other pilots and air traffic controllers about their situation if it is an emergency. They are

1.      Pan-Pan : Used when an aircraft is suffering from a condition that causes concern about its safety, requires timely but not immediate assistance and could lead to a potential distress situation, and

2.      Mayday: Used when an aircraft is under threat from a serious and/or imminent danger and requires immediate assistance.

Will Coronavirus cause a Pan-Pan or a Mayday situation to arise in your business?