Four Strategies to Mitigate the Disruption of COVID-19
By Hisham Farouk, Grant Thornton UAE
Fortunately, our understanding of how to address the challenges of COVID-19 is improving every day. Our medical and scientific communities are learning and adopting new strategies to deal with this global crisis, as are the world’s policymakers. To address the climate of uncertainty, universal stimulus initiatives and cuts in interest rates, such as the ones instituted by the Bank of England and the US Federal Reserve during the first two weeks of March, bring the American cost of borrowing down to its lowest level in 50 years. However, given the unknowns driving the current situation, and unfortunately in some cases, panic, I think now is the time for family businesses in the MENA to take precautionary measures. It’s time to act swiftly and prepare for the worst-case scenario. I’m not suggesting that businesses need to act on these contingency plans, but they should absolutely have them prepared.
Family business leaders can start by updating their continuity procedures to reflect the reality of office shutdowns and remote work; investigate how these measures might impact costs and timelines. I believe budgets should be reassessed and redeveloped with a worst-case scenario in mind. We’ve already seen the first wave of industries, including aviation, logistics and hospitality, momentarily crippled by the COVID-19 pandemic. Those in other industries should take note and prepare, not panic. I believe cash flow and working capital are critical right now, but regardless of the balance sheet, sustainability may hinge on having a budget that works no matter what. Again, I’m not suggesting businesses hit the big red button and immediately change direction, but they need to be mentally, emotionally and fiscally prepared for whatever comes next.
To begin with, I see a few options to help family businesses mitigate revenue loss and supply chain disruption right now:
Invest in infrastructure to enable remote working.
We are seeing the importance of agility firsthand. Businesses must keep working to maintain productivity, and many still are. Google’s entire North American workforce, more than 100,000 employees, are currently working from home. Regardless, remote work settings are becoming more prevalent every year.
A framework that facilitates working remotely with obvious considerations given to server access and security will stay relevant long into the future.
Consider market demand while evaluating supply chain.
Take a look at how a slowdown in orders can lead to transparent discussions with customers. I think one of the most interesting things about this outbreak is that it’s a truly global phenomenon. Whether suppliers are located in China or Germany or even the Middle East, what’s happening is impacting everyone. There are many examples to learn from, and just as many creative options for businesses when it comes to developing contingencies.
Dive deep and be honest.
Businesses can be reluctant to audit their internal structures and cost models. Now is the perfect time to ask the difficult questions and be prepared to act on the answers.
If the worst-case-scenario becomes a reality, due diligence could be the only deciding factor between success and failure.
If it doesn’t happen, businesses will still gain actionable insight and potentially save money down the road.
Businesses should imagine their model against various scenarios and see what ends up happening. Not only can discoveries from this exercise inform decisions when it’s business-as-usual again, but they’ll also proof the business for the next big challenge.
Regardless, whatever direction the business takes must be examined through the lens of social responsibility. People are still the priority. Businesses are created for people, and not the other way around. It’s easy to say and harder to do, of course, but we mustn’t forget the remarkable situations where companies stood by their teams through a crisis and came out the other side with an unmatched competitive advantage. Organisations that support their staff and are willing to invest in their wellbeing do more to ensure their future than anything else.
Hisham Farouk is the CEO of Grant Thornton UAE; he has over 20 years of experience leading high-profile advisory engagements for some of the largest groups in the region. Hisham is a member of the Board of Governors for Grant Thornton, driving the strategic direction of the brand globally as well as in the Middle East.