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 the current global crisis, as are the world's policymakers.
To help the economies during this climate of uncertainty, global economic stimulus initiatives and reductions in interest rates are taking place, such as the Bank of England, or the US Federal Reserve whose efforts brought down the American cost of borrowing to its ever-lowest level in 50 years. However, and given the unknowns feeding into the panic, I think that now is the time for the MENA-based family businesses to take the necessary precautionary measures: It's time to act swiftly and prepare for the worst-case scenario. I'm not suggesting for businesses to show an immediate reaction by acting on contingency plans, but they should have them ready and be prepared.
Family business leaders can start by updating their continuity procedures to reflect the reality of office shutdowns and remote working practices, as well as to investigate how these measures might impact various costs and timelines. I believe that budgets should be reassessed and redeveloped with a worst-case scenario in mind. We've already seen the first wave of impacted industries, including aviation, logistics and hospitality, that were momentarily crippled by the COVID-19 pandemic. Businesses in other sectors should take note and prepare, but not panic. I believe that 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. Once again, I'm not suggesting businesses to hit the big red button and immediately change direction, however, 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 as of 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. Nevertheless, remote work settings have been 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 the number of orders can lead to transparent discussions with customers. I think one of the most interesting things about this outbreak is that it's truly a global phenomenon. Whether suppliers are located in China or Germany or even in 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 insights and potentially end up saving money down the road.
- Test your resilience. Businesses should test their model against various scenarios and see what the potential outcome could have been. Not only can discoveries from this exercise inform decisions when it's business-as-usual again, but they'll also safeguard the business for the next big challenge.
Regardless, whichever 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. Of course, it's easy to say and harder to do, but we should not forget the remarkable times when companies stood by their teams through a crisis and came out of the other side with an unmatched competitive advantage. Organizations that support their staff and are willing to invest in their wellbeing do more to ensure their future than anything else.