22 March, 2020.
The Premier of Victoria has announced that we are proceeding with a Stage 1 shut down of all non-essential activity across the state in line with the Federal Government approach.
- Victorian Premier Statement (Daniel Andrews) – https://www.premier.vic.gov.au/statement-from-the-premier-33/
- Prime Minister Statement (Scott Morrison) – https://www.pm.gov.au/media/supporting-australian-workers-and-business
You might feel confused, paralysed or apprehensive, but as a business owner, you need to act now.
So what do you do?
I love Andy Weir’s quote in The Martian film: “They say, no plan survives first contact with implementation.” This is unchartered territory. Tread carefully and be prepared to change tack based on the facts that present themselves.
I set out my thoughts on each of these with some possible actions to consider.
Your actions and decisions are entirely your responsibility. These are just my thoughts.
Let’s get into it.
1. Assess the ability of your business to survive two months
Before you can start planning, you need to know what capacity you have to withstand the Lock-Down and the subsequent period of major disruption, regrouping and returning to normal. Anecdotal conversations I’ve heard from China factories were that it’s pretty much past and its back to business as usual for many businesses there by now.
In general, assessing your business means looking at:
- Regardless of your current financial position, do you think your business will be able to trade out of/after this, as a going concern? Is your business sound, but for this Lock-Down? This is an opportunity for honest, critical reflection. If the answer is “no”, then its time to prepare to close the doors, as many businesses are.
- What is your cash position that is accessible, right now?
- What debtors are immediately collectible, right now?
I assume that anyone who hasn’t paid a debt within 90 days at this point, is probably uncollectable.
Action: Call every debtor with invoices receivable that are current-thru 90 days and confirm the date of payment and discuss the opportunity to pay some or all of it early. - What GST and Payroll PAYG contributions are payable?
Are you eligible for the Department of Treasury of matched $25,000 PAYG relief?
Can you arrange with the ATO to defer payment of your next few quarters ATO payments and create a payment plan to spread them over the remaining 12 months?
I hear that they are being very supportive now (as has always been my experience).
Action: Either way, talk to the ATO about support. - What are the costs of opening the doors each month?
Typically, the major items include: staff, rent, cost of goods purchases. - What are the interest charges on your debt finance? Have you spoken with your banker?
Following the Treasurer’s announcement for further stimulus, banks are providing additional support to their customers by providing relief through reduced lending rates, extending loan periods, extending credit and even pausing repayments. These initiatives are all designed to give financial relief and assist in trading through these challenging times.
Action: Speak with your bank and seek assistance that best suits your circumstances. - What do you owe your current suppliers/creditors over the next 2- 3 months?
Just as you want your debtors to pay us, you have a moral obligation to pay your creditors, too. - We are all in this together.
Based on the above, how many months of operating costs do you think you have available to fund the Lock-Down?
2. Plan what will happen during the Lock-Down
There are 7 steps:
- What activity can/will your business perform during the Lock-Down? Is your business captured within the list of essential activities exempt from a Lock-Down? This will determine to some degree the level of impact that this will have on your ability (and responsibility) to trade your business during the Lock-Down.
- What business activity will continue and at what level during a Lock-Down?
Action: Define this by business function and service e.g. warehousing, repairs, finance, service, etc - Who will perform those activities during the Lock-Down?
Action: Prepare a schedule of which staff are required to work, and if there is essential productive work for them to do during a Lock-Down. - Who will continue to work (full time, part-time, ad hoc / on-call, etc) and who will be stood down during a Lock-Down?
Action: Add this to the schedule of all employee/contractors and your decision - Decide for each person or group, what/how they will be paid under, e.g.:
– Normal pay for normal essential work of the business
– Annual Leave
– Carers Leave
– Part-time
– Casual by the hour
– On-call allowance
– Leave without pay
– Stand-down with no pay
– Pro-rata
– Some other formula.
Confronting, possibly painful and uncomfortable as this is, it is vital to know where you stand, what your decisions need to be, how you are going to make them, your legal employment obligations, your financial capacity, and be sure to check-in with your moral obligations.
Action: Add this to the schedule - If you have identified staff to work from home, can they transition to this immediately to reduce the rush and you can test this out and fix it now?
Action: Arrange those who will be working from home staff to trial it, asap. - Seek legal advice to understand your position. I found this informative webinar by HR Legal to be really clear and easy to understand.
3. Communicate “Lock-Down” to your staff.
We need clear, open communication immediately. A little bit of structure will help.
- All staff, on & off-site need to be contacted, but how and by who?
Action: Prepare a Roster. - What will you say to them?
Action: Prepare a script/email/voicemail/short video
For example, a few bullets might include:
Dear staff/individual,
We have been advised that the government has announced a Lock-Down,
or,
We have decided you need to close the doors for self-imposed isolation due to the virus and lack of customer demand.
This means that:
– Group A will continue to work from home, (some at reduced hours)
– Group B will stand down fully without pay
– etc
– ???[Using our HR processes, you can apply for annual leave, long service leave depending on your leave balances and our policies/business decisions, etc]???
– if you are working from home…
– if you are on call…
– if you are stood down …
We are all in this together and we are all affected. Please be patient, compassionate and supportive.
And so on.
Action: Prepare the instructions now. - Anticipate lots of questions, confusion, and uncertainty.
Action: Prepare a Frequently Asked Questions (FAQ) document now. Stick to the facts of what you know, and what you plan.
Be measured, confident, reassuring, honest, and do not make commitments you can’t stand behind. Say what you do AND do not know. - Who will do this communication and if you have large teams, how will you confirm that every employee has been contacted?
Action: Prepare and agree the roster and lines of communication. - If staff are going to be working from home, it’s important to check that staff have established a safe working environment within which to work and that you show you have: taken an interest in their safety; raised their awareness levels; and, encouraged them to take responsibility. Here is a basic checklist for them to sign from HR Legal.
4. Support the team during Lock-Down.
I think it’s the important right thing to do for connection, continuity, mutual support, to touch base with your team at least twice per week during the period. This will help them feel, heard, not forgotten, not isolated, and to also hear how their peers are getting on and problem-solving.
- Plan how you will and who will do this.
Some clients are planning a 2-3 times weekly group video/phone hook-up to help the teams stay in touch.
Action: Prepare a plan and possibly a roster (depending on the scale of workforce). It might consider: Schedule including who hosting it, format, participants, Agenda
Mechanism (WhatsApp/zoom/ph calls to mobile etc). - I think it’s important and really nice to hear direct from the CEO (e.g. via a short video for large audiences) of what is going on, what is being done, a sense of reassurance, any wins or achievements, etc
Action: Prepare to communicate personally as efficiently and consistently as possible to all of your team.
5. Bring the team back to work.
Finally, you need to plan how you will notify the business to come back to work. Brief your leadership team on this so they are aware and are prepared:
Think about:
- Who will decide?
- Which staff and when?
- How many staff on & off-site need to be contacted, how and by who?
Action: Draft the plan knowing it will need to be very flexible. Just make a start. - What will you say to them?
Action: Prepare a proforma script/email/voicemail/short video, in preparation for recrafting it in the face of real circumstances.
6. In Summary
- Assess the ability of your business to survive two months. Now is the time to know and plan, regardless.
- Plan what will happen during the Lock-Down. Create the plan: Who, what, how, when.
- Communicate “Lock-Down” to your staff. Communicate now, knowing you will change actions as events require it.
- Support the team during Lock-Down. Know who will do what, how, frequency, etc.
- Bring the team back to work. Prepare to bring them back as required and let them know what they will do.
I can’t emphasise enough, Communicate. Communicate Communicate:
Openly, honestly, Authentically.
Bring your leadership team in on this planning asap.
People won’t remember what you said, but they will certainly remember how you made them feel and how you behaved.
These are turbulent and challenging times. We are all experiencing it. There will be mistakes and great successes.
You are not alone in trying to figure this out. Reach out to your family, friends, peers, and advisers.
Wishing you and all of your families (personally and at work) good health
JD
“Thoughtful, rational, community-focused, compassionate, ethical words and actions.”
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