We are clearly in uncharted territory and the COVID 19 outbreak has had a crippling impact on the global economy.
While millions of people around the world are doing their best to minimize their exposure to the virus, the WHO and its executive partners in the US, Canada, Australia, and New Zealand face an uncertain and stressful future. They face falling demand for their products and uncertainty about what the future holds.
We need to be well prepared for a global downturn, but is it better to overprepare or overprepare?
Here are seven steps to consider to help you and your practice navigate through these uncertain times, as well as some tips and tricks for practical use.
- Develop Financial Scenarios
How long will it take you to run out of money for your medications, and how high will your costs be variable or fixed? Do you think your income will change in the short or long term, or do you create a practice?
Are there additional cushions you can pull out of your line of credit, such as a 401 (k) or other retirement or savings account?
- Scrutinize Your Cost Structure
It may take some guessing to predict your financial statements for the next few months, but this exercise could uncover areas that require immediate attention. It is important to spend a little more time combing line items in the financial statements for costs to be removed. For example, you could find ways to cut costs by cancelling subscriptions or downgrading services. If expenditure does not contribute directly to revenue generation, it should be eliminated altogether.
If you haven’t recently switched insurer, it’s time to look for alternatives or cheaper providers. Also look at ways to cut costs, such as the cost of insurance premiums, deductibles and co-payments.
- Reach Out to Lenders, Landlords and Creditors
As the effects of the economic downturn are felt, many business owners fear defaulting on loans or being sued for unpaid debts. The federal government and many states have already taken steps to halt evictions, but how far such state action will go and for how long remains unknown.
If your practice is unable to make payments on a loan, mortgage, or unsecured debt, be proactive and reach out to share your situation. You may find that those who owe you money are willing to change the terms of your arrangement at this difficult time.
- Reconnect with Key Patients
If you are able to generate long-term patient loyalty and goodwill, you can reach your patients faster and more effectively than if you did not. Remind patients that you have kept social distance from the examination room in order to comply with the COVID-19 order and that your office remains open for business.
Depending on the financial health of your practice, you may be able to offer assistance, including extended payment periods. These discussions will also provide you with information to improve the accuracy of financial forecasts.
- Communicate Regularly with Employees
It is human nature to struggle with uncertainty, but one must also believe that their interests are at heart. Employees need to know that you understand their concerns, and even if you can’t share news, you should make communicating with them a priority.
If you expect to dismiss an employee, reduce their working hours, or know other medical practices that are in hiring mode, share this information with them. When normal operations resume, former employees will return to remember you for helping them in times of crisis.
- Revisit Your Staffing Model
Ideally, small practices want to keep valued employees on the payroll for as long as possible. In some practices, it may be time to hire contractors instead of full-time staff.
This potentially reduces costs and increases the flexibility of the human resources model, as well as the efficiency and productivity of practice employees.
- Monitor Government Responses
Now is the time to face up to the reality of COVID-19 and sign up with federal agencies like the Small Business Administration (SBA) and the IRS to ensure that you are informed about the program as soon as it becomes available. The federal and state governments are working on various financial relief measures to help your company through this difficult time.
We’re All in this Together
Reach out to your tax, human resources or legal advisers to find out what resources are available to you.
This requires an understanding of COVID-19 and its impact on your company, your employees and the financial situation of your company.