McKinsey and Co. outline two possible scenarios, one of Delayed Recovery, and one of Prolonged Contraction3, depending on how the epidemiology of the pandemic evolves.
Large-scale quarantines, travel restrictions, and social-distancing measures drive a sharp fall in consumer and business spending until the end of Q2, producing a recession. Although the outbreak comes under control in most parts of the world by late in Q2, the self-reinforcing dynamics of a recession kick in and prolong the slump until the end of Q3. Consumers stay home, businesses lose revenue and lay off workers, and unemployment levels rise sharply. Business investment contracts, and corporate bankruptcies soar, putting significant pressure on the banking and financial system.
Monetary policy is further eased in Q1 but has limited impact, given the prevailing low interest rates. Modest fiscal responses prove insufficient to overcome economic damage in Q2 and Q3. It takes until Q4 for European and US economies to see a genuine recovery. Global GDP in 2020 falls slightly3.
Demand suffers as consumers cut spending throughout the year. In the most affected sectors, the number of corporate layoffs and bankruptcies rises throughout 2020, feeding a self-reinforcing downward spiral.
The financial system suffers significant distress, but a full-scale banking crisis is averted because of banks’ strong capitalization and the macroprudential supervision now in place. Fiscal and monetary-policy responses prove insufficient to break the downward spiral.
The global economic impact is severe, approaching the global financial crisis of 2008–09. GDP contracts significantly in most major economies in 2020, and recovery begins only in Q2 20213.
A well-designed plan will help you minimize the risk that an emergency poses to your employees, clients and suppliers, the continuity of your business operations and your bottom line.
- Create a trigger-based portfolio of actions3.
- Your plans should include a clear directive for non-essential travel, remote working procedures, enhanced cleaning measures and frequent updates for your employees4.
- Protect your cash flow. Optimizing your cash flow should be a priority since your expenses are likely to go up, while your income could decrease due to disruptions to your operations. The impact of the virus will differ by sector4.
- Plan for staff absences due to a number of reasons, e.g. personal illness, ill family members, looking after children if schools close, feeling of safety being at home etc. In some cases, employees may themselves elect to stay home. In other circumstances, the government may authorize or require them to do so1, 2.
- There may be disruption to essential services including information, telecommunications, financial services, energy supply, and logistics1.
- Plan for the possibility of disruption to supply of necessary materials or contractors (see Supply chain) 1.
- Depending on the sector, there may be a major increase or decrease in demand for products and services1.
- Cancellation or disruption of travel and cross-border movement of people and goods is already a reality, consider this in your plan1.
- Cancellation of public meetings or gatherings like sports events, concerts or religious services is already a reality, consider this in your plan1.
- There may be a large scale impact on the trade status of Canada, or of our trading partners1.
- Increased public fear may cause citizens to avoid public places, including front line retail and tourist-related, restaurants and leisure businesses, even after public health measures are relaxed1.
The pandemic, as well as public health measures undertaken to contain or control it, may have far reaching effects on supply chains.
- For many companies around the world, the most important consideration from the first ten weeks of the COVID-19 outbreak has been the effect on supply chains that begin in or go through China. As a result of the factory shutdowns in China during Q1, many disruptions have been felt across the supply chain, though the full effects are of course still unclear3.
- Perhaps the biggest uncertainty for supply chain managers and production heads is customer demand. Customers who have pre-booked logistics capacity may not use it; customers may compete for prioritization in receiving a factory’s output; and the unpredictability of the timing and extent of demand rebound will mean confusing signals for several weeks3.
- Minimize the risks to your supply chain. Contact your suppliers and ask about their exposure and contingency plans in case of supply disruptions4.
- With travel advisories and restrictions continuing to be put in place in affected areas, Canadian exporters will need to find a way to minimize the risks to supply chains and global commodity prices that COVID-19 could have on their business. The risks of not getting paid from an international supplier, partner or customers will continue to rise5.
Effective communication with your employees, providers, management, and all other stakeholders is a crucial aspect of your preparedness plan.
- Ask customers to understand and align with your company’s brand. Clearly think about your response to their concerns and questions, and how you can help them navigate this time6.
- Build your customer-facing Strategic Messaging Map, aligning it with your brand commitment. This includes press releases, social messaging, content, and any communication activities featuring chatbots, live chat and more that your sales and customer-success teams use6.
- Communicate with your employees early and often. Employees will rightly expect organizations to provide accurate, authoritative information. Organizations can build pandemic awareness into business-as-usual internal communications: share information and infographics from authorities; educate business travellers on measures to take and symptoms to look out for; and encouraging functions and teams to review their pandemic arrangements7.
- Engage with critical suppliers. Businesses should have sight of their critical suppliers’ pandemic preparedness measures and encourage ongoing dialogue on current-state readiness should the threat materialize6.
- Remain in contact with key stakeholders. Businesses may need to coordinate with local and national public authorities as part of regional preparedness activity. Communications with other stakeholders, including investors and customers, will be key to maintaining stakeholder confidence7.
Resources and support documents
For more in-depth information, refer to the following resources.
- Support for businesses (Barrie & Simcoe County)
- Business pandemic preparation guide
- Support for workers and businesses from the Prime Minister (March 18)
- Business implications from COVID-19 pandemic: useful resources list from Mars DD
- Survival strategy for your startup
- Province launches hotline for business support during pandemic (March 25)
- Prime Minister announces support for small businesses facing impacts of COVID‑19 (March 27)
- Call to action: Canadian manufacturers needed to help combat COVID-19 (April 27)
- The impact of COVID-19 on women entrepreneurs
- Health and Safety Association guidance documents for workplaces during COVID-19 outbreak. (April 30)
- Health and safety guidance during COVID-19 for employers of office settings (April 23)
- Businesses given the green light to open in Ontario (May 8)
- Canada’s COVID-19 Economic Response Plan to provide support to Canadians and businesses
- Small business government relief programs
- Special support from the BDC
- COVID-19: Economic relief measures announced to date
- Canada Emergency Response Benefit (April 10)
- Plain language guide to applying to COVID emergency benefits (April 11)
- Funding resources for businesses related to COVID-19 (April 15)
- Federal government commits additional $250 million in IRAP funding to support high growth start-ups (April 17)
- Ontario – Canada Emergency Commercial Rent Assistance Program + Notice from the Prime Minister (April 24)
- Agri-food open for e-business – targeted intake (April 24)
- Prime Minister announces expansion of support for workers and small businesses (May 19)
Below is a list of sources referenced on this page:
- Canadian Chamber of Commerce. (2020). COVID-19: Pandemic Preparedness for Business http://www.chamber.ca/resources/pandemic-preparedness/BusinessPrepGuidePanPrep2020
- Government of Canada, Trade Commissioner Service. (2020). Coronavirus disease (COVID-19): Resources for Canadian businesses. Retrieved from: https://www.tradecommissioner.gc.ca/campaign-campagne/ressources-entreprises-COVID-19-business-resources.aspx?lang=eng
- McKinsey & Company. (2020). COVID-19: Implications for business. Retrieved from: https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business
- Business Development Bank of Canada (BDC). (2020). Useful advice to help entrepreneurs plan and respond to the impacts of coronavirus. Retrieved from: https://www.3.ca/en/about/mediaroom/public_statements/pages/useful-advice-help-entrepreneurs-plan-respond-impacts-coronavirus.aspx
- Export Development Canada (EDC). (2020). Coronavirus (COVID-19): Managing the impact on global supply chains. Retrieved from: https://www.4.ca/en/events/webinar/managing-impact-on-global-supply-chains.html
- (2020). Preparing for the new coronavirus outbreak: Practical steps for pandemic preparedness. Retrieved from: https://www2.deloitte.com/global/en/pages/risk/articles/practical-steps-for-pandemic-preparedness.html
Limitation of liability
The Henry Bernick Entrepreneurship Centre (HBEC) works hard to present useful and insightful information to help you grow your business. We do not make any representations or warranties that our advice will cause your business to succeed or achieve specific objectives; that’s up to you. As a viewer, you acknowledge and agree that in no event shall Georgian College or any of its directors, employees, mentors, students or agents have any liability whatsoever to your business; you take full responsibility for all decisions concerning your business.