How to Prep your Company for Shelter-In-Place Orders

As COVID-19 continues to pose a serious threat to the health of people across the nation, almost all the states in our country are considering shelter-in-place orders. In fact, some have already implemented this containment strategy. We want to keep ourselves, loved ones, and neighbors safe; but for manufacturers a shelter-in-place order could create substantial hardship. Unlike many industries such as accounting or software development, factories can’t work from home. A shelter-in-place order will require the shutdown of most manufacturing companies. So how can you prepare? Here are a few considerations:

Plan Ahead When Possible

If your state does not yet have a shelter-in-place order, put a plan together now so if the order does come, you’ll know what steps to take next. Will your company be considered essential critical infrastructure due to your role in health, defense or other government functions? Either way, the plan should specify what will happen to each of your employees and how you will communicate these messages. Do you have a way to communicate to all of your employees? If not, it’s time to figure one out. You will want a clear communication line with your entire staff. It may also make sense to have any form letters for employees prepared in advance and reviewed by legal counsel.

This is also a time to plan for communications with your customers, both before a possible shelter-in-place situation and afterwards. Are you ready to provide updates on your website or through an email campaign? If you are considered an essential business you will want to provide communications to those who may have a need for your services as well.

Furlough or Layoff

I’m not an attorney, so make sure to check with your own legal counsel, but here’s my brief understanding of the differences between a furlough and a layoff. Under a furlough, an employee remains an employee on unpaid leave and they are able to retain their benefits. An employee on furlough can generally file for unemployment. On the other hand, a layoff severs the relationship with the employee. A laid off employee can also file for unemployment. Furloughs are often used when the separation is considered temporary, and you intend to bring the person back to work. For more information on this topic, read this article from the law offices of Snell & Wilmer.

Understand the New Laws

There’s been a flurry of legislation related to the coronavirus pandemic. Become familiar with it and integrate it into your plan. As mentioned before, the law firm Snell & Wilmer writes informational and concise articles that explain the legislation in layman’s terms. Here are the links to two important ones:

Families First Coronavirus Response Act

Small Business Administration Loans

Your business may also be eligible for a loan from the government, to get more information visit the link here: SBA Disaster Assistance in Response to the Coronavirus.

Cash Is King

Nobody knows how long this situation will last, how it will continue to change, or how long it will be before we’re on the road to recovery. In times like this we need to focus on cash preservation. Have your financial people develop a detailed cash plan, probably day-by-day for the next 13 weeks and find the opportunities to conserve cash. You’ll want to factor in that your customers are likely going through the same exercise, and timely collections may become more challenging.

In normal times, most business leaders focus on the P&L. I know that I do. However, these are not normal times, and cash needs to be the focal point of our energies.

We’ve weathered crises before, and we’ll get through this one. If you want some help thinking through your plan, or even if you just want a sounding board as you make decisions, please give me a call at 651-398-9280. I’m here to help.

Best of luck to you and stay strong.

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