While business owners are well-acquainted with the concept of risk, that term has likely taken on a whole new meaning in light of the coronavirus pandemic. Even the most risk-averse business owners likely did not see this massive global crisis coming, and certainly did not anticipate the rapid and overwhelming impact it would have on their business.
What could we have done differently? What steps could we have taken to mitigate against this risk, and what steps can we take now as we look forward to the new realities of business? Here are five essential lessons learned from COVID-19 to help strengthen your business for the future:
1) Be agile and adaptive to thrive.
If 2020 has taught us anything, it’s that the only constant is change. There will always be unforeseen circumstances ahead of us, both in business and in life. As a result, businesses that operate with both agility and adaptability are more likely to sustain and thrive in our ever-changing global economy. When you master the art of ‘pivoting’ your business, you’ll have an easier time adjusting to sudden changes. In the context of COVID-19, businesses have done this by quickly adopting and learning new technologies and shifting to remote and curbside methods of serving customers. How easily can you shift to accommodating customer and employee needs? Businesses that are reluctant or slow to take these steps have proven less likely to withstand the hits that seem to keep coming.
2) Proactively anticipate risks to strengthen your business.
While it may not be possible to predict every potential risk that might come our way, it is possible to anticipate the vast majority of risks that your business might face. In fact, there are entire frameworks built specifically to address enterprise risk management. A strong risk management program will involve regular (at least annual) comprehensive risk assessments that result in real action. Your risk management plan should document how much risk your business is willing to take, all potential risks to your business strategy and operations, how you will control the risks, and other aspects as well.
At the very least, performing a risk assessment will force your leadership team to consider their risk tolerance – how much risk they are comfortable taking – and then identify concrete steps to mitigate against any risk that exceeds that risk tolerance. Where a business might otherwise feel helpless and overwhelmed in the face of so much uncertainty, a strong risk management program can empower leadership to identify, implement, assess, and balance the effectiveness of strategic risk mitigation tools, such as contracts, insurance, and operational processes.
If you don’t have a risk management plan and would like to get one going for your business, it’s always a good idea to start by examining the current state of your business. To get started, our team of attorneys would be happy to conduct a complimentary Business Health Assessment for you, helping to better gauge your risk and give you actionable recommendations to strengthen your business.
3) There is power in smart contracting.
In the hectic life of a busy business owner, potential risks may squeeze through the cracks. These risks could include missing an essential note in the fine print of a contract, or struggling through DIY business protections. Working smarter vs. harder will help ease some of those potential risks. To ‘contract smarter,’ work closely with advisors to ensure everyone is on the same page with respect to your details and plans related to the engagement. A partnership with your advisors should include active participation in the negotiation process to ensure that you remain aware of the risks that you are accepting when you sign.
It is also important to remember that contracts are not static. With new learnings comes an opportunity to update form contracts, even those that are currently in progress with business partners and vendors. For instance, you may need to revise that form agreement to ensure that the force majeure clause considers pandemics and acts of governmental authority. And as circumstances evolve and result in material changes to operations, parties may need to come back to the table to address how those circumstances impact the relationship.
4) Avoid “that will never happen” mindset.
Murphy’s law, which has proven to be more true than ever before in 2020, states that “whatever can go wrong, will go wrong.” It may be tempting to look at a given risk, however likely or unlikely, and think “that will never happen.” Instead, ask yourself, “Am I willing to accept the consequences in the off-chance that does happen?” Business leaders must be proactive in future planning to avoid any business snags that could have been preventable.
5) Invest in the right people.
A business is only as strong, agile, and adaptable as the team running it. With the rise of remote work, business leaders are learning how their team members adapt to work both independently and collaboratively, with little face-to-face interaction. Employees who bring a positive attitude and a strong work ethic are more valuable than ever as we all cope with challenges and distractions. And by having a remote workforce, this can open the door for employers to seek out ideal candidates who aren’t local to your area. Strengthen your business by focusing on building and maintaining a culture that values and rewards those individuals. When you do, your business will be better positioned to thrive.
You are not alone – Speak with an attorney to discuss your remote work policies, business health and risk assessments, incorporating compliance and governance into enterprise risk management, reviewing contracts, creating policies and procedures, and more. Contact us at 425-250-0205 or firstname.lastname@example.org.