Will coronavirus create risk or opportunity for your firm?
The economics are clear. Schools are closing, businesses are telling people to work from home. Corporations are predicting lower earnings, which will lead to layoffs. Restaurants, movie theaters, bars and tourism-related companies are all predicting revenue losses.
Some businesses will suffer, while others will flourish. The restaurant industry is a great example of one that will suffer. If the virus keeps people out of restaurants for several weeks, that is non-recoverable revenue. When dining resumes, people will not eat three times as much to make up for that lost revenue. The entire supply chain is impacted from food producers, truckers, servers, suppliers of cups, utensils and other products. The impact will be felt for a while and might not be noticeable until the second or third quarter.
What businesses may thrive due to the virus? Obvious examples are medical supply companies and cleaning supplies. On the news everyone has a mask on, or they are showing workers in jumpsuits spraying chemicals everywhere. The manufacturers and distributors of those products will record massive profits. Airports, government agencies, schools, and almost any business that deals with the public will need to build a stockpile. Consumers will wipe out retail stores when they restock their shelves. The post-corona wave will continue to be ridden due to fear of this repeating and likely replacement supplies will come in at a higher price.
What is the risk for your firm with existing clients? Some clients will see profits suffer. A few might have a catastrophic financial outcome. Your firm might be put under pressure to reduce fees or defer project work that will impact your bottom line. Conversely, clients who see a revenue surge may need additional accounting support, new systems or have the capital to invest in other strategies such as acquiring another business. This is the time to step up as a trusted advisor.
What is the opportunity with prospects?
1. Thriving companies. Should you temporarily realign your prospecting to businesses providing sanitary supplies, drugs, skilled support, etc.? They will experience an unplanned surge and may need tax planning, growth ideas or other services and be outgrowing their current firm.
2. Financial challenged. Companies who are negatively impacted may need to put in enhanced budgeting or forecasting, require analysis to reduce costs, discuss strategies to grow, or need restructuring support. Others might be under severe pressure to maintain their loan covenants and will need your financial insight to help negotiate with the bank or refinance debt.
In the accounting profession, change generally creates opportunity. Proactive firms should be looking at clients experiencing profit reductions and offer support. For your top clients, make sure they know you care, because retention of existing clients is a cornerstone of growth. With smaller clients, you may want to suggest ideas they can implement on their own. If they need your help, they will ask.
Meanwhile, consider adjusting business development temporarily to companies that might favorably be impacted by the virus. Then, select some prospects who likely are going to financially suffer from the virus who might be great A-level clients for you. They might not be getting the attention they need from their current firm or can no longer afford them. Another firm’s B-client could be your A.
