The World Health Organisation defines the new global pandemic coronavirus disease as a highly infectious disease caused by a newly discovered strand of the coronavirus in late 2019, hence the infamous name (COVID-19).
Most people infected with the COVID-19 virus experience mild to moderate respiratory illness and recover without requiring special treatment. However, older people and those with underlying medical problems like Cardiovascular Disease, Diabetes, Chronic Respiratory Disease, and Cancer are more likely to develop severe illnesses.
The effect of this disease on the body can be harmful – but its impact on the world economy is expected to be more detrimental. Unlike previous financial crises, this pandemic poses very different challenges due to the fast-evolving spread on a global scale and its long-term duration, which has created a lot of uncertainties for businesses all across the world.
Even organisations with Disaster Recovery Plans (DRPs) are not left out of these challenges, as travel bans, lockdowns, and social distancing policy responses enacted by governments all across the world arose from the least of their expectations. The world did not plan toward a pandemic of this nature, and this will influence us in the months or years to come. As a result, some of the effects we are experiencing or are yet to experience are:
- Fall in global demand as families lose their usual income and businesses defer investment.
- Cashflow problems caused by a significant downturn in expected revenues and profit from businesses.
- Supply Chain disruption due to a shortage of imported raw materials as a result of isolated countries.
- Increase in the unemployment rate as a result of huge job losses and recruitments frozen by organisations
- Massive productivity loss, especially for technophobic companies whose employees cannot work from home due to the absence of supportive cloud services.
- A huge escalation in the budget deficit of governments due to unplanned expenditure on health-care and unplanned provision of relief packages with simultaneous fall in tax mobilisation as a result of the economic downturn in businesses.
- Widened gap between the rich and poor, as the poor are less educated and more likely to be laid-off.
These problems highlighted are bound to occur, but the survival of businesses during and after this turbulent time will depend on their responses. Amid the crisis and uncertainty, it is difficult to make highly conclusive suggestions as to how businesses can and must handle the situation. However, these actions can go a long way to manage and mitigate adverse effects of the current situation:
- Businesses should assess the impact on their operations and provide strategic plans despite the uncertainty. This involves financial forecasting to find a more resilient strategy to address any foreseeable bottlenecks and key risks such as Logistics, Supply Chain, Tax regulations, Human Resource which can hinder business continuity. Strategies on Logistics, Supply-Chain and Human resources will be key.
- There should be effective communication between stakeholders – especially customers and employees. To stay in business, it is essential to understand the needs of customers and identify any shift in preferences – social media can play a key role in this regard.
- Employees need to be reassured of their job safety to stay motivated; decisions regarding termination and modification of contracts should be communicated openly and transparently.
- Businesses should make effective reviews and take advantage of government stimulus packages where eligible. It is important for businesses, especially small firms, to maintain proper bookkeeping practices as this is required to access relief packages.
- Search for an alternative Supply Chain plan, especially when raw materials are imported.
- A flexible work arrangement should be implemented. Where possible, a home office can be set-up to enable your employees to work from home. Online service delivery can be employed to engage customers when the premises are physically closed, and reduce commuting and protect employees from being exposed to this viral disease.
For individuals in this uncertain time, I believe these actions can help alleviate the current downturns and provide a cushion if the worst occurs;
- Expenses should be reduced to save more as the duration and extent of the pandemic remain uncertain. Personally, my monthly budget has no inclusion of dispensable expenses such as fancy clothes and shoes and so on to mitigate expenses and save cost. You simply need to buy only what is necessary!
- Get a contingency plan in case you are made redundant or if your work hours are reduced. Consider a part-time job that can replace lost income. You never know, you might quit your job when you start!
- There is opportunity to enrol in an online course or learn a skill if you have spare time. Acquiring an essential skill in your line of work can increase your salary or can save you from redundancy.
As at now, we all don’t know what the future holds; the financial system globally remains uncertain, but it is certain that people and businesses who are well-prepared will survive the storm and recover more quickly.
>>>The author is an award-winning ACCA qualified accountant and has audit experience working for a ‘Big Four’ professional services firm in Ghana. He also holds a degree in Economics and Information Studies from the University of Ghana. He is passionate about promoting positive business activity and financial literacy. Feel free to contact him via LinkedIn; Emmanuel Adu Acquah