COVID-19 - The Next Phase of Business Continuity Planning (20 April 2020)
Assessing what alert level 3 would mean for your business
On Thursday 16 April, the Government released broad information on what a shift to alert levels 3 and below might look like for New Zealanders, including what might change for businesses.
The shift to alert level 3 will happen at 11:59pm on Monday 27 April. This gives businesses a week to consider how they may be able to operate under the conditions of alert level 3. The Government has provided additional guidance here on what workplace activities are permitted at different alert levels - this is a very informative resource and we recommend all business owners take the time to review it in detail.
In summary, some businesses will be able to return to semi-normal operations with changes to their health and safety systems and processes (for example, construction, manufacturing, food production, etc.). However, there are other businesses that can only operate with significant changes / restrictions to their business model (for example, retail businesses, cafes and restaurants cannot open their bricks and mortar storefronts, they may only offer delivery and / or click and collect). There are also some business that can’t operate at all (for example, hairdressers, barbers, nail salons, etc.).
In some cases, the decision to re-commence operations will require careful consideration, particularly for the likes of cafes and restaurants. Business owners will need to assess whether it’s worthwhile operating under such restrictive conditions. They’ll need to weigh up the costs & benefits of the:
Income they can generate, and
Time, cost and stress involved.
For many businesses, re-commencing operations will be a no-brainer. However for some businesses, operating under alert level 3 might be counter-productive if the business cannot generate enough income to cover the additional costs of operating. If you are unsure whether it makes sense to re-open your business, we recommend you get in touch with us for advice.
Get ready to reopen
Businesses will need to consider what changes they need to make in order to safely re-commence operations. Possible changes may include:
Revised health and safety plans
Changes to systems and processes
Investment in new equipment to protect workers
Adjusted staffing and rostering to minimise face-to-face interaction between workers
Investment in e-commerce assets to enhance digital capabilities of the business
Adjusting premises layout to reduce face-to-face interactions and/or to enable contactless click and collect
Purchase of stock / supplies
Some of these changes may require significant upfront investment. Businesses will need to consider whether these costs will provide a sufficient return on their investment. When analysing these investment decisions, we encourage businesses to think beyond COVID-19 and also consider the long term value of the investment. For example, a retail business without an e-commerce presence may benefit significantly in the long term from investment in development of an e-commerce platform.
The Government has confirmed that business owners will be able to re-enter premises during the next week to receive stock.
Review and obtain relief
If eligible, most business should have already applied for the wage subsidy scheme (and other related schemes).
They should have also reviewed and if applicable applied for other relief, including from landlords, IRD, business funded support etc. See here for further information
Understand the financial impact on your business & review expenditure
It’s critically important for businesses to have a good understanding of how COVID-19 may impact their cashflow under various different scenarios. We recommend that business owners regularly update their forecasts and monitor the impact of key changes as events continue to evolve. If you don’t have the in-house expertise to perform forecasting and scenario analysis, then we recommend you get in touch with us for advice.
Businesses should also look to reduce expenditure where possible. Careful thought is required when considering which costs to cut, as short-term decisions could have long term implications.
Utilising idle capacity
While it’s expected that many employees will return to work under alert level 3, there will still be some situations where staff are idle. We encourage businesses to consider how they may be able to utilise idle staff for internal business development activities that will add value to the business in the long term. For example, staff could help with developing key systems, preparing operations manuals, strategic planning, marketing, product development, etc. There may also be opportunities to bring forward asset maintenance activities and to front end administrative work. By pro-actively engaging in these activities businesses can put themselves in a position to hit the ground running when demand picks up again.