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Can a business protect itself from COVID-19?

Mar 13, 2020

Businesses will face unexpected and unprecedented challenges in the months ahead. Conor Devine explains what some can do to stay afloat.

You would be forgiven, after watching or listening to the news over the last couple of weeks, for thinking that we are fast approaching the end of the world. Yes, I am referring to the outbreak of COVID-19, which, and as a direct result of the rapid spread of the disease, has led to the lockdown of 26 countries (and rising), and some 190 million people under quarantine.

There is no doubt that this virus and its impact across the board is unprecedented. It has, however, illuminated the fact that we are living in a connected world that operates in real-time. For example, doctors and nurses on the front line in places like China, Italy and the US are live-tweeting updates from intensive care units. News updates state the actual numbers of those infected. At the same time, messages from friends and communities alert us to lockdowns of schools and public spaces, creating volatile reactions in markets around the world. It’s an incredible turn of events and one that few saw coming.

Here are some of the economic tremors that rocked the world in the last week:

  • US stock markets had their worst day in 30 years, falling 10%.
  • In Europe, equity lost 10% of its value.
  • In London, the FTSE 100 fell 11%.

All of this has increased concern regarding a global recession and a severe credit crunch. However, there are a few things business owners can do in the weeks ahead to ensure that they are prepared for an immediate downturn in turnover, which now looks unavoidable.

So, what can business owners do today? And what should they look at and consider if, as some maintain, turnover could drop by more than 50% for some businesses immediately? Here are some measures business owners could consider in light of recent events:

  1. Business owners and managers to take a pay cut for the next six months.
  2. All remaining staff to take a pay cut for the next six months.
  3. Cut staffing levels to reduce costs immediately.
  4. Engage with landlords and propose a reduction in rent over the next three months, to be reviewed quarterly.
  5. Put business investment on hold and review quarterly.
  6. Engage with local authorities and propose that you hold back your business rates.
  7. Engage with business groups and government representatives to insist on a VAT holiday for the next six months.

On a personal level, I firmly believe that it is more important to start by looking after ourselves and those closest to us. We can fix our financial challenges with the right level of expertise and advice in due course.

COVID-19 will pass, and things will return to some form of normality in the next six to 12 months. But it’s what you do today, and in the weeks ahead, that will have a real impact on you and your business’s ability to navigate the tough terrain that faces us all.

Conor Devine MRICS is founding partner of Clearpath Finance.