No doubt, this strange virus is causing a panic around the world. At a death rate of 2.5 percent, but with 82 percent of cases classified as “mild”, needing no medical intervention, the actual number of deaths is low relative to active cases. However, airlines, governments, and millions of people are treating the coronavirus with due care. As a business owner, you should too.
Don’t panic, but do prepare.
Check your supply chain for vulnerability. Affected countries are everywhere, but the threat is concentrated in China, which affects the rest of Asia. If your business relies on goods manufactured in China, you may be in a jam as coronavirus shuts factories there. This has already affected many small business owners.
For example, sellers on Amazon or other online platforms have seen their products demoted, as Amazon’s algorithm penalizes products that are out of stock. The result has been increases in prices as sellers try to slow sales to avoid demotion or delisting. Meanwhile, sellers have scrambled to find manufacturers in other countries.
The time to locate backup suppliers is BEFORE an emergency.
Long before the coronavirus outbreak, trade wars shifted production from China as Chinese manufacturers quietly constructed factories in places such as Thailand, Vietnam or the Philippines in an effort to circumvent U.S. tariffs. Tariffs add to your overhead, and quarantines can delay or stop your shipments altogether.
Develop a network of suppliers in many different locations. If you do, you can switch quickly. Imagine the competitive advantage as you seamlessly fill orders at whatever price you wish, as your competitors struggle with the disruption.
Plan to take care of your people and your family. Get supplies for your home and encourage your people to do the same. You can stock up on food, disinfectant , and possibly protective gear such as masks or latex or rubber gloves.
You can get insurance for much of this risk. The Chinese economy is the second largest in the world, and many Chinese companies in the affected area have suspended operations. Cruise ships, airlines, and shipping have been affected, as the Wuhan province from where this virus originated is positioned on the Yangtze River. This makes Wuhan a major shipping thoroughfare, which affects anything that could pass through or that has passed through.
International companies such as Starbucks, McDonalds, Apple and KFC have closed their stores in Wuhan and other affected provinces.
If you have not done so already, get quotes for business interruption insurance. Business interruption insurance provides coverage for when your operations are directly affected, such as a travel quarantine. However, your customers and suppliers can be disrupted too, which has a direct effect on your sales. These are called indirect losses. Insurance for such a scenario is called contingent business interruption, and you should obtain a quote for that as well. Make sure that any business interruption insurance includes civil authorities coverage. This covers losses when government authorities restrict access to areas where a business operates, or areas that a business depends on for operations.
Directors and officers (D&O) coverage protects company leadership from liability in the event that shareholders or owners take legal action against them for decisions made in the course of business. Get a quote.
Errors and omissions (E&O) similarly covers a company against claims arising from actions a company took or should have taken. Get a quote.
Workers compensation protects your employees in the event that a work-related injury or illness prevents them from working. It provides coverage arising from claims from employees for such claims. Get a quote.
Arrange a line of credit BEFORE you need it. You may know this already, but banks only lend to businesses that will repay the loans. Apply for loans and lines of credit when you are doing well and making sales. Do not ask your bank for a loan after you have lost revenue and customers.
You have many options for getting a small business loan or line of credit. In the event that you are insured for loss or business or sales, a bank line of credit can keep your business operating until the insurance claim is paid.
Incorporate emergency planning into all of your business planning. Having a plan in advance pays off huge in an emergency. How will you stay in contact with employees? Partners? Suppliers? If you can be the first to re-open after any emergency, if you are the only supplier open as your competitors struggle to re-open, you will experience a boom.
In conclusion, an emergency such as the coronavirus presents hazards, but also opportunities for your business. Your competency will be on display one way or another, and you will find that with a little advance planning, your business will survive this. Even better, your business can exploit the lack of preparedness of your competitors.
Prepare, stay safe, and prosper.