All language subtitles for 2. Brace for impact - Business Preparation

Up to this point you've probably thought a lot about what the situation will do to your supply chain

and how you get product in the future and that you might run out of stock.

But considering that this crisis doesn't just affect the country you have been sourcing from but maybe

also the country that you're selling in or living in means that you also have to take other measures

and other parts of your business are in danger and need a second look.

The specifics here are probably very different for every single business.

So I'm gonna go very broad here and describe the different areas that you should take a look and take

preparations that fit with your current business.

First of all I want to point out again e-commerce businesses are the lucky ones here.

I mean everyone that is selling products has to supply chain issues but once panic hits your country

or the country you're selling in people will buy online instead of going to the store and most likely

deliveries will be available for longer than open retail stores.

This also means that there could be potentially an increase in demand on Amazon for your product.

I would say This highly depends on if you have a product that I would categorize as high needs or no

need product in this specific scenario.

A high need product is something like face masks right.

It is something that specifically in this situation is highly needed.

And in contrast if you're selling a pet glove people just don't necessarily have the needs because they

won't improve or save their life as much in the moment.

And be aware that sometimes it's not as obvious.

Which product is a high needs versus low need product.

It can be quite interesting to see what people buy in this situation.

For example the demand for swimming goggles went through the roof because the disease can be transmitted

via the eyes.

And people want to protect their eyes and this is the best option for them to buy.

So overall your business is facing risks in multiple areas.

And the first and probably most obvious area is if everything is being closed and nothing can be delivered

anymore you are out of business for a while.

And how much that impacts your business.

Probably highly depends on the size of your business and on your cash flow needs.

If you are running into cash flow issues frequently already you should have a deeper look into your

cash flows and ask yourself Are you ready to be out of business for two or three months without selling

anything having your inventory set at Amazon but still having to pay suppliers inventory that you're

ordered.

Loans that you have maybe your employees or freelancers that you can lay off.

So the most practical step here is to to make a list of everything that you're paying every single month

and see how long can you go if your business is being closed.

And then think about what costs of those.

Could you reduce if your business is being closed for an extended period of time especially if you have

a low ROIC product.

This is where you need to watch out and you have a higher risk of running into cash flow issues.

In contrast I also want to point out that the US government is trying to keep the economy going and

loans have just become even cheaper.

And as a result this also provides an opportunity to potentially get a loan to lock in fixed interest

rates and have enough cash at hand so you can still pay for your next inventory and keep your business

running and especially make sure after everything opens back up you're the one having inventory.

And while I have described this as a massive risk to your business if you're smart about it this can

also be a huge advantage if you have fierce competition because if your competitors don't take the right

steps they might go out of business or they might go out of stock and you're the only one left selling

that specific products.

Now let's say the worst case scenario doesn't affect you yet there's still other ways how your business

could be affected one of which is your employees and freelancers.

If you're paying people on a monthly basis and they get sick from the corona virus they might be out

for an extended period of time in regards to employers.

Of course it's important to follow local laws here and see if you have to pay them during the time when

they're sick.

But even if you have people freelancers that are working for you full time from the Philippines for

example you should consider if you keep paying them while they're sick if they have been with you for

an extended period of time can they have delivered good work and you support them even through this

hard time.

They're very likely to stick with you in the future and be very loyal to you.

So consider the long term effect of still paying them while they're sick and if you're facing a lot

of cost pressure you could also consider negotiating them that they're receiving a lower rate while

they're sick.

I'm sure they will really appreciate your help.

On another note if you have people working locally for you you could also consider sending people home

and letting them work from home.

A lot of big businesses already did this.

Now lastly I want to talk about raising prices and reducing costs.

And this is something you should be continuously thinking about throughout this process either.

If you demand increases or decreases as a result of the virus if your business is being closed for a

while or when getting back into business when your business was closed temporarily.

So first of all consider raising your prices.

This special situation might lead to you to increase costs in your production process and your sourcing

process or anywhere else in your business.

And you can justify increasing your prices in this specific situation.

And specifically when inventory is low and demand is high increasing prices is a good idea.

So do go ahead spy on your competitors see how much inventory do they have left because they might also

be affected by this situation.

And second you can reduce your cost every single month.

You have expenses that are coming up no matter what.

But most likely temporarily you would be able to lower these costs by negotiating with your suppliers.

Negotiating with your employees especially if your business is shut down for a few weeks during these

negotiations and thinking of smart ways how you can reduce your cost will massively help you to stay

in business overall.

Consider that in these kinds of situations businesses can go bankrupt.

But it also provides the opportunity for businesses to grow and make an absolute killing.

So just spending some time taking these points and analyzing your situation would probably drastically

help you to increase the profits you can make in this situation.