The COVID-19 crisis is turning out to be one of the biggest challenges to businesses in recent memory, perhaps even greater than the global economic recession of 2008. With the government implementing strict measures to contain the spread of the novel coronavirus, businesses expect numerous delays and disruptions in their operations. However, this pandemic has highlighted several things that business owners can learn from moving forward. Here are some of them.
1. A pandemic is impactful like other risks
Business owners are no strangers to risks. Starting a business is inherently risky, and large-scale industries such as construction tend to experience higher risks due to the scope of the projects and the number of participants and stakeholders in each of them. This is on top of the risks of not getting paid because of the payment issues that have always plagued the industry.
Unfortunately, the COVID-19 pandemic is drastically different from the hazards commonly experienced by business owners. The stay-at-home policies implemented by the federal and state governments means employees will work in limited capacities. Disruptions and delays are more frequent as the supply chain is slowed down by the pandemic. Ultimately, this can result in the total stoppage of operations and loss of income.
2. Force majeure provisions are not just boilerplate clauses
The COVID-19 crisis has made it apparent how important the force majeure provisions are in a business contract. Before the pandemic, these provisions were usually regarded as boilerplate clauses, which means that they were a standard part of contracts. But now, these force majeure provisions, as well as impossibility of performance clauses, have been at the forefront of discussions as many contractors fail to fulfill their end of the contract due to the novel coronavirus crisis.
As the pandemic goes underway, business owners should review their contracts as they may provide relief and more time to finish their jobs than what was agreed upon. And when the crisis ends, it is highly advised to revisit their contract creation process and ensure that these clauses will address situations like the COVID-19 crisis.
3. Meeting preliminary notice requirements is crucial
Cash flow is tight during a crisis. That is why it is paramount that contractors and business owners not just do their due diligence in pre-screening clients but also be proactive in protecting their right to get paid. And the first step in doing so is to timely prepare preliminary notices. Without these notices, chances are contractors will not be able to file a mechanics lien in case a client fails to provide compensation for services rendered and materials furnished. Especially with the COVID-19 situation, the ability to collect receivables is crucial to staying afloat.
4. Flexible work arrangements can enhance business continuity
As the COVID-19 disrupts organizations across the globe, business leaders should look for opportunities that can ease the transition to the new normal. Because of stay-at-home orders, a lot of business owners have expanded work arrangements to include flexible options such as work-from-home setups.
Industries that may not be keen to transition from the traditional office setup will have to adapt to the current situation and look to the benefits of remote work. Not only does working remotely bring improvements to employee productivity and well-being, but it also reduces the health risks associated with commuting. When the crisis is over, consider implementing these expanded work arrangements permanently.
5. Having a solid communication infrastructure is paramount
The communication infrastructure of your company is crucial to the dissemination of correct and updated information. Especially now that there needs to be the proper implementation of hygiene and social distancing measures to curtail the spread of the virus, these steps can be effective only if they are properly communicated to employees.
In addition, the COVID-19 situation has been emotionally taxing for everyone. There will be bouts of anxieties and doubts within your workforce, especially with the risk of work stoppage. It is important to demonstrate a thorough understanding of the situation and answer their questions in an honest and reassuring way.
Once the COVID-19 crisis is over, it will take a long time for things to go back to normal. In fact, things may not end up going back to the way they were before and businesses will need to adapt to the new normal. However the situation evolves, business owners should take this opportunity to learn new things and maintain resilience in trying times.
About the Author
Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.