Business Continuity a Big Challenge in Covid-19 Times
Entrepreneurs Need to Focus on Emerging Opportunities to Stay Afloat, BDO Analyst Says
SAN JUAN – Even the best business continuity plans in Puerto Rico—for those who have them—have been put to the test by the Covid-19 pandemic. Yet, business owners can still keep their enterprises afloat by reorganizing operations to take advantage of emerging needs and opportunities in the current emergency, a business continuity expert assures.
Aida Escribano, a partner at the BDO Puerto Rico accounting and auditing firm, told Caribbean Business that not only must business owners remain focused on stabilizing and keeping their companies running, but they should also set up task force teams of key employees and consultants to seek out financing and market opportunities during the crisis.
Escribano said BDO has launched a microsite/blog to address Covid-19 challenges and financing opportunities: https://pr-www.bdo.global. She will hold the first in a series of webinars, titled “Strategies to Increase Cash Flow: Understanding the CARES Act Related to SBA Loans.” Thursday, April 2’s webinar starts at 3 p.m. For more information, visit https://pr-www.bdo.global.
One of the key aims of this task force, Escribano explained, should be “reimagining” or “reinventing” the purpose of a given business in times of the novel coronavirus, which has upended daily life on the island and throughout the world.
The curfew/lockdown executive order implemented by Gov. Wanda Vázquez March 15, which has been extended to April 13, mandates the closing of most non-essential businesses while allowing essential businesses in the health, food, banking and manufacturing sectors to remain open, albeit for limited hours.
“We had Hurricane Maria, the earthquakes and now the coronavirus. Every day, throughout the world, there are different risks,” Escribano said, adding that such risks include critical customer and vendor losses, loan defaults, cyberattacks and internet outages. “There are many businesses that came out better prepared after Hurricane Maria, but many more did not anticipate the type of crisis we have now. Maybe many have generators in case the power goes out and are aligned to what we are accustomed to which are hurricanes. But, unfortunately, for this situation they are not prepared.”
Escribano said that the level of preparedness to face certain risks and identify opportunities determines the ability to maintain a business running, adding that business owners “must be proactive not reactive.”
The certified public accountant said business owners often get bogged down in “little problems and details” when complications arise due to lack of preparedness, and lose focus of the “big picture.” A business disruption, even as severe as the current one, can be “turned from a threat to an opportunity,” she said, adding, “This is where an action plan comes in.”
“Sometimes business owners do not know where to start and get lost in the details. But they should think holistically,” she said. “Managing the crisis should not fall on just one employee, but groups of employees dealing with the different fronts in the battle to get things under control.”
Escribano said that in the current crisis the use of technology is vital to continue operating a business virtually. Many businesses can have their employees work remotely from their homes—as was the case in the aftermath of hurricanes Irma and Maria in 2017. Applications such as Microsoft Teams, Zoom and Skype allow companies to set up face-to-face virtual meetings with clients, she said.
“What we most learned from the hurricane process was the great importance of working remotely, above all when offices were destroyed and records could not be accessed. We learned that we needed information redundancy,” she said, noting that cloud technology—both internal and external—allows the storing of data that can be accessible remotely. In the process of keeping a business viable, such data are needed to monitor progress and make operational and strategic decisions, she added.
“The business owner should create task force teams to tackle the different fronts in these situations, such as communication with your employees, communication with your clients and communication with the community. These communications must be aligned. This is the most important step at the beginning of the process,” she said. “You should use technology to always be in contact with your clients. We should never lose that connection because that is what maintains the sense of normalcy.”
A focus on need
Escribano, who is also a certified insolvency and restructuring accountant, said that businesses need to repurpose themselves during the pandemic to stay afloat. She pointed out how locally based rum producers Bacardi and Serrallés are producing ethanol alcohol to make hand sanitizer, which is in short supply, for hospitals and other healthcare centers in the fight against Covid-19. Local startups such as LabbGo are filling the need for Covid-19 testing at individual homes instead of having patients risk infection by visiting clinical labs.
Gov. Vázquez has also allowed other businesses such as hardware stores and automobile parts and repair services to reopen during certain hours and days of the week, but can only serve customers with appointments.
“These are good examples from the perspective of restructuring in business development. This is reimagining your business, because with the crisis there is opportunity,” she said. “You need to reorganize your business so that you can put these ideas to work in your new strategy. You need all of the pieces of the puzzle to fall in place so this strategy works.”
Escribano acknowledged that this “reimagining” of a business is easier for some given the nature of the crisis.
“Many of them offer essential services and have continued their business,” she said, noting that many of the business continuity clients BDO is working with during the outbreak are in distribution and manufacturing. She declined to give specific examples, citing client confidentiality. “I have many clients who are reevaluating their strategies and have not made an announcement, yet.”
Documentation is key
Escribano said these emergency business restructurings have to deal with many challenges such as having employees get to a place where they will have contact with each other, or having to hire employees to address an increase in sales.
As the economy sinks, the biggest challenge businesses on the island are facing is obtaining the financing and cash flow needed to continue operating. The Vázquez administration announced last week a series of economic relief measures to aid businesses affected by the lockdown closures. Moreover, President Trump signed into law last week the $2.2 trillion Coronavirus Aid, Relief & Economic Security Act (CARES Act), which provides billions of dollars in rescue funds to businesses.
However, Escribano cautioned that business owners must have their paperwork and a plan in place to take advantage of these opportunities. She said many companies must keep their financial records in order to qualify for loans and credit lines.
“There are many things happening in terms of incentives, credits and restructuring of loans. There will be a series of opportunities,” she said. “But how fast can we react to those opportunities if we are not prepared for them? If you are going to present a proposal for financing you need to rely on information to present projections.”
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