COVID-proof your business today, or pay the price tomorrow.
COVID-19 is the biggest threat to humanity in the last 100 years. As much of a threat as it is to your health, it is probably an even bigger threat to your business. If your business is still running at this juncture, then you’re doing pretty well but it’s no time to rest on your laurels. With the unknowns involved in re-opening our economy this summer, as well as the threat of additional waves of infections in the fall, now’s the time to give your business a much needed vaccination. Here are five critical steps you should be taking to COVID-proof your business and make sure it has a fighting chance to fend off whatever is coming next with the COVID pandemic.
Step #1 COVID-Proof Your Business With the Right Pivot
Yes, the COVID-19 pandemic requires your business to pivot. No, you cannot just “wait until this is over” and go back to business as usual, or just charge forward with your old business model with a “damn the torpedoes” attitude. This is called “business suicide” and we’ve seen many examples of this over the past weeks. Like gyms that have re-opened with no change whatsoever to their business model (and in violation of closure orders no less). Or law firms that have just put up a “we’re closed during the pandemic” sign and just quietly serviced existing clients only, with no eye to the future. These are businesses that are soon to be closed… for good!
On the other hand, some businesses have taken their time off to pivot smartly. One local coffee shop (my personal favorite) pivoted from serving custom-crafted cups of coffee to people on their premises to selling them pastries and jugs of the same custom-crafted coffee through their drive-through window and via Door-Dash. Not only will this allow them to continue to be very profitable even during COVID-mandated closures, but when they are allowed to (slowly) transition to on-premises services again, with their new stream of revenue, they will be miles ahead of the competition! Similarly while some restaurants have just been biding their time (and laying off employees) hoping to reopen to traditional dining room service again, others have taken the time off to ramp up their outdoor, social-distancing-safe seating to maximize their ability to serve their customers when they can.
No matter what industry you’re in, the COVID pandemic has changed certain aspects of it FOR GOOD and the only way to COVID-proof your business is to adapt to key trends:
- Your customers are more driven than ever by convenience and instant gratification (think drive-through, curb-side, home delivery, instant downloads)
- Social distancing is here for the long haul, therefore digital service delivery (e-signatures, document portals, telemedicine, video-conferencing) is here to stay
- Hands-on or close quarters activities will be shunned (not just because of governmental restrictions, but because people will be leery of it)
Adapt quickly to these undeniable trends and your business will be a growth story that outpaces its competitors. On the other hand, those businesses that choose to be in denial about these trends will soon be irrelevant relics.
Step #2 COVID-Proof Your Business With Digital Infrastructure
One of the most important parts of Step #1 is to build up your digital infrastructure. For those businesses that were using a server in a closet, unwieldy desktop computers from the 90s, and passwords on sticky notes, the need to remote-work almost overnight was a very rude awakening. Other businesses that were already taking advantage of cloud services and remote-working-friendly hardware had a much easier time. Judging by what big companies like Twitter and Facebook are saying, remote-working is here to stay and at least during the remainder of the pandemic, you will need to build up your digital infrastructure. As you work on your digital infrastructure make sure that you use business-class products. Consumer-grade products (like gmail or free tiers of cloud storage) don’t have the security features or robust up-time guarantees that your business and customers/clients deserve.
As you work to COVID-proof your business, here are some areas of your digital infrastructure that need attention and/or upgrading:
- Cloud storage. You and your employees need to be able to access your needed documents and media anytime and anywhere in order to be effective at remote working. If you work with sensitive personally identifiable information (like in the financial services, accounting, legal, or medical industries) then you will need to be even more careful in selecting cloud storage that meets criteria such as HIPAA requirements.
- Password management. Sticky notes are bad enough of a practice for password management when everyone is in the office. It definitely won’t work when transitioning to remote working. Spreadsheets might be easier to work with but are a nightmare for security. Your digital infrastructure should include a good password manager. Take this opportunity to convert your team to a password manager that will allow you to manage user access to passwords, require users to generate secure passwords, and, of course, make logging into sites that much easier!
- HR software. If you need to manage a remote workforce, paper personnel files won’t cut it. Cloud-based HR software will be a huge lifesaver here.
- CRM. Say goodbye to paper files. Take the time to choose the right customer relationship management (CRM) so your sales, customer service, and back-office teams can be effective wherever they need to work from.
- Video-conferencing. In-person meetings are probably obsolete for the long haul. Whether it’s for social-distancing or convenience, COVID has definitely ushered in the digital-meeting age. If you haven’t already, take the time to explore the different video-conferencing options and settle on one to be your standard go-to solution for all your meetings, internal and external.
Step #3 Shore Up Your Legal Foundations
How are the legal foundations of your business? To COVID-proof your business, you must make sure your legal foundations are solid.
This is a huge topic and could use its own blog post (or series), but here are a few minimum basic considerations:
- Choose the right business entity. Make sure you’ve chosen the correct legal entity for your business. Hint: it’s almost never a good idea to operate as a sole proprietor and, with a limited number of exceptions, it usually isn’t a great idea to be a corporation either. In most instances, you will want to operate your business as an LLC. An LLC has great flexibility in how it is formed and operates, has minimal requirements for record keeping, and can choose any tax status it wants.
- Keep good records. The legal foundations of your business are only as solid as the business records you keep. In particular, make sure that you at least keep the records that are required by law for LLCs and corporations (the very onerous recordkeeping requirements of a corporation is one of the reasons why the corporate structure is usually the wrong choice for most small businesses).
- Use good contracts. If you use poorly written contracts, then the health of your business is at risk. Badly written contracts are one of the top reasons why businesses get into legal problems. Whether it’s a liability waiver agreement that is written so badly that it doesn’t actually do anything to protect your business, or a client services agreement with so many holes you could drive a truck through it, bad contracts have no place in your business. P.S., drafting custom contracts that actually do protect your business is something that I do for many businesses so if you’re interested in upgrading your contracts, I’d love to help!
Step #4 Strengthen Your Leadership Team
If you’re a one-man or one-woman show, you can skip this step. If, on the other hand, your business is of any size at all, you’ve probably noticed the importance of having strong leadership as you weathered the COVID storm and dealt with such things as transitioning your employees to remote working, dealing with closure orders, and making massive changes to your business model just to stay alive.
In the (hopefully) lull in the storm that summer brings, one of the most important things you can do to COVID-proof your business is to strengthen your leadership team. Now, more than ever, your leadership team must be at its best. Here are a few things I recommend:
- Make sure everyone on the team knows your company’s mission statement and exact business model
- Make sure everyone the team knows their exact title, responsibilities, and extent of authority
- Detail the roles and responsibilities of your leadership team members in your business records (usually in your Operating Agreement or Bylaws) and update them if necessary
- Make sure all your employees know who on the leadership team approves or provides guidance on key issues that regularly arise
Step #5 COVID-Proof Your Business with Great Records
Keeping good business records is always a best practice, whether you’re wanting to ensure that your corporate shield stays intact, worry about a tax audit, or just like the peace of mind of knowing you’re doing things right.
That being said, never before has it been more important to keep good records for your business. Here are four very important reasons why:
Reason 1: Risk of litigation is increased
Anytime anyone loses money, they look for someone to blame. With COVID, LOTS of people have lost money. That means that your business’ risk of getting sued is probably at an all-time high. In addition to making sure that you’ve got proper insurance coverage for your likely risks, you are likely relying on your business’ corporate shield to protect your personal assets (if your business is an LLC or corporation). If so, you should know that your company’s corporate shield is only as good as the records you keep since, of course, it doesn’t exist except through its records. If you don’t keep proper records, especially the records that are required by law, then a court could allow creditors to pierce your corporate shield and get access to your personal assets to satisfy any judgements. Not good!
Reason 2: Disaster loan requirements
Did you apply for any disaster loans like the Paycheck Protection Program (PPP)? If so, then keeping good business records isn’t just important, it could keep you out of jail! These loans might be generous (for example, the PPP can, under certain conditions, be forgivable) but they also require that you can prove eligibility. If you don’t keep good records that support your eligibility, at best you might be audited and required to return the loan, at worst (if the government suspects fraud) you can face fines or even criminal prosecution!
Reason 3: Tax purposes
COVID has created a number of tax issues that you should be aware of.
First, there is the heightened risk of audits. Have you wondered where governments will be looking to get back some of the billions of dollars they’ve had to pay out for everything to keep society intact during this pandemic? Experts are already warning clients that New York will be likely increasing audits to try to recoup some of their losses. Don’t be surprised if other states or even the federal government follow suit. Obviously if your business gets audited, keeping good records is very important!
Second, if you’ve suffered casualty losses as a result of COVID, you may be entitled to certain tax deductions. In order to qualify for, and support these tax deductions, you will want to keep proper records as advised by your tax accountant.
COVID Doesn’t Need to Have the Last Word
There’s no avoiding it. COVID-19 is a massive threat to your business. But with just a little bit of planning, you can significantly improve the resilience of your business and maximize its chances of surviving and thriving.
How has your business been faring? Let us know if you need help and remember that if you’re a member of our Business Owners Club you get free consultations, and if you have COVID-19 concerns about your business you will get 25% off any flat-rate legal services to address the problems. Business Owners Club membership is free for a limited time. Learn more on the Club invitation page.