How to prepare your business for the next crisis


As a business owner, coronavirus becomes twice as scary for you as it is for others.

In addition to its dire health implications, the economic impact is undeniable as unemployment numbers and mortgage forbearance numbers have risen up to their highest levels since 1929’s Great Depression and 2008’s Subprime Crisis, respectively.

While lockdown measures in Israel, and globally, have been lifted almost unanimously, and the economy seems to be on its way up back at this present moment, some businesses are still suffering.

In Israel, some of the best known restaurants have failed to withstand the burdens of a prolonged lockdown, and shut down, and globally, some multinational conglomerates such as Hertz have already declared bankruptcy. In the USA, a recent academic paper has estimated that 100,000 businesses may be required to shut down this year, as a direct result of the COVID-19 crisis and associated lockdowns.

Many businesses are still far from operating normally nowadays. Whether it may be event venues in Israel, which are still functioning under stringent laws banning large gatherings, or the largest cinema chain in America, AMC, which has signaled it may face bankruptcy this year. Riots are still causing major civil unrest in the USA, and can last for a very long time. Smaller financial institutions, such as online lenders, have yet to resume operations at all (besides SBA lenders dispersing government funds through the PPP program). Even some of the most resilient industries in the Israeli Silicon Wadi have been forced to lay off staff.

While all the information above can be used for further scaremongering, I believe it can also be used for productive purpose. Businesses need to learn the lessons of 2020’s unfortunate events, and adapt to a new world order, rather than run scared, or rely on a vaccine (which may prove less effective than desired). A second and third wave is deemed as a plausible scenario by scientists, and while a full-fledged lockdown seem less reasonable than before, restrictions are likely. Even if the coronavirus is a thing of the past, this is not the world’s first nor last pandemic, or Act of God (although some insurers claim it does not constitute as such).

Key takeaways from COVID-19 for businesses

Reduce your financial commitments (debt) – less debt equals more flexibility and a longer supply of oxygen if times are rough. Do not overborrow despite the low interest rates.

When you do borrow, avoid high interest borrowing (unless for very short periods) – many businesses prefer the comfort of non-bank lenders when they borrow money. As a rule of thumb, non-bank lenders will have a higher interest rate to pay, but in times of prosperity, businesses turn a blind eye to that due to the inherent advantages. That perspective can change rapidly if your business starts missing out payments, as interest compounds over the course of time.

Reduce unnecessary staff and overheads ahead of time – it was said that the COVID-19 crisis will be a catalyst for a more efficient way of working moving forward. Those who are laid off are the non-essential employees, and WFH (or “work from everywhere”) will actually help companies cut unnecessary costs. In reality, business owners should have made all necessary changes to keep their businesses lean and efficient ahead of crises.

Stop enabling suppliers and business partners to defer payments  – the last thing you would want in a time of crisis is to chase others for your hard-earned money (and potentially lose some of it, if any of your suppliers and partners goes belly up).

Do not assume the government will come to bail you out  – the US government’s involvement in business financing/grants this year has been greater than anything we’ve ever seen before, but that doesn’t mean all governments will always decide to go down this path. Look no further than Israel which has supplied limited assistance to small businesses in this time of crisis.

Be ready and aware for all possibilities – if your business has failed and your excuse is that it was in a “once in a century type of event”, then you were not prepared enough. Whether it may be a pandemic or another change for the worst in global economy, you need to take that into consideration when you are building your business’ long-term plans.

Keep cash reserves – you may need to pay suppliers, employees, mortgage or rent while not having a sufficient income, at a time of crisis. A good rule of a thumb would be to keep at least 3 months of expenses in cash, if you are able to – if you had that, then a 1-2 months lockdown would not have seemed as critical.


I hope we, as business owners, do not have to go through similar ordeals in the coming years, but being prepared and ready can’t hurt.

About the Author
Alon Rajic is the Managing Director of Fintech firm Finofin LTD. Before that, he worked for XLMedia PLC as the Head of SEO, and helped the company grow from seed stage to a market cap of $200m.
Related Topics
Related Posts