ROCG Asia Pacific

Prepare for the Worst- Expect the Best. Covid-19 Update

As a business owner, you can’t ignore the COVID-19 and that times are in a state of confusion and uncertainty.

The one thing we cannot do is dig our head into the sand and ignore what is happening – we need to make conscious and aware decisions – with this in mind I have outlined below some of the areas that need to be considered and indeed some of the things we have done in this respect for ourselves.
The one thing I would say upfront is many of these things should be considered regularly, there is just a higher need at the moment, because there are possible implications, but they are good business practice at all times.
As a business owner or a director, we have both business and legislative issues or considerations that come from COVID-19.

The Workplace

As employers and directors, we have a workplace safety responsibility to our employees and those that are on our premises to ensure a safe environment so we need to set guidelines. One of the keys we need to remember in this respect is there is no such thing as common sense. What we often feel is simple or common sense does not apply. What we think as business owners and employers comes from a totally different angle to what employees often think. We need to be upfront and ensure our employees are aware of what will happen in any given circumstances.
We have uploaded to our website / attached links to

Self-quarantining – What are your policies re self-quarantining – what are staff requested to do or is it a staff decision themselves. Does this mean they are working from home (if that’s feasible) or is it
time off.

  • If it is work from home – do you have systems, access and controls in place to allow for it to occur (we have just spent a lot of time making sure we do)
    If it is time off, how is that classified for you (annual leave/leave without pay / a stood down period etc – each of which has different financial implications to you and an employee). What it ends up being and costing you can in some cases come down to your policies and what you have communicated to the workplace before any occurrence. Any decision made last minute is always going to be less thought out and often made based on what has to happen at the time rather than a thought out guideline.

Per Fairwork as at 6 March 2020

Travel – What are your policies on travel. For me, over the next two months I have both domestic and international travel and at the moment there is no thought that I will change any of these. The travel all has a purpose. However, countries are constantly changing their criteria for entry and what that means and therefore, my plans may be altered any time up to the day of departure. One of the keys to me is on my return if there is any risk in any of the locations I will have to consider if I need to self-quarantine work for a period of time and don’t, for example, visit my parents who would be in a higher risk category.

Access to premises – What happens if you cannot access your work place. Many buildings have already flagged that if one person working in the building becomes sick the building will be shut down for a period of time. Can you have your employees work from home, and how do you do so, if they can’t work from home and it’s your choice – is it stood down leave (ie they have to be paid) or is it annual leave or leave without pay (part of this depends on if you as the employer makes the decision or if it is enforced on you by another party – such as the building owner. Is any of this covered under one of your insurance policies?

The key to me in this area is be aware of these obligations and outline thoughts first so you are not on your back feet if something does happen. Decisions we make and policies we put in place potentially effect people and their income -> so we need to be clear and upfront.

From a financial point of view you could be impacted on either the revenue or the supply side (or both). The honest thing is a large portion of items have some part of them made in China or other
countries – if you can’t get stock or supplies, you may not be able to sell stock or services.

Let us consider for a second a simple product such as a builder and tiles

  • If the tile retailer cannot supply the tile the customer has chosen as its source is constrained then the tile shop does not earn the revenue.
    If the consumer chooses to wait, and does not choose an alternate product that the retailer has available then they may need to consider reducing employees, or other actions if their revenue is not greater than their costs.
    If the consumer hasn’t chosen an alternate product, then the tiler does not have a product to install, and therefore doesn’t earn their income. And to a certain extent the cycle continues – if the tiler or retailer aren’t earning their income they tighten their belt and may not consume other services or products they
    previously did and then that impacts another business.

 

Supply chain

Can you get stock (or supplies you need in your business) to sell or provide services – is anything that influences your business influenced by an overseas market for production or supply and do you need to consider the implications of this on your business. Do you need to seek other sources. Don’t assume in this respect – contact your suppliers and ask them the question. We have one client who thought they had 3 months of stock on hand, they have had a run on their products and unless they can obtain more, they will be out of stock in three weeks, so they are seeking to ramp up production
asap.

If you don’t have product /supplies, how is it going to impact your business, and if so, you need to work through the factors and what that may mean overall to you.

Alternatively, does it present an opportunity to you, financial circumstances allowing to obtain deals from other parties (either domestically or internationally).

Revenue

The one thing we know is that people do not buy from a purely financial or need decision, they buy (or don’t but) largely based on emotion. So consumer sentiment and how people are feeling will
influence consumer choices.

We have already seen Chinese restaurants talking about substantially reduced revenue and closures, and on the flip side panic or stock pile buying of other goods. How is this going to impact you, are consumers going to tighten their belts (if their income is potentially reduced or they perceive a risk) and how is that going to impact whatever you do.

Plan for the worst, expect the best – this may be a blip, China production may enter full swing and supply constraints may fade away. What will really happen is currently unknown, we are in a period of uncertainty. The only thing that is certain is if you plan for the worst you will be prepared and will also be able to take advantage of any opportunities that may present themselves.