With the Coronavirus causing catastrophic effects on the global economy, businesses need to take urgent action if they’re going to make it through this turbulent and volatile time.

Will the economy hold up is yet to be seen but what we do know is every single business owner must be prepared for the potential devastation that could arrive if things turn south.

There’s a lot at play here. While others aren’t worrying about warning signs in the economy, it’s important to take note of the massive recomposition in the form of changing industries that is going on all around us.

In the last six months alone we’ve seen 166 retailers in this country go bust which is billions of dollars in business gone.

The reality is, money is still being spent but it’s being spent in other areas. We’ve seen for a long time now the recomposition of traditional retail move to eCommerce – however, despite online and technology gathering momentum faster than ever, no industry is safe in the event of a global crisis like Coronavirus.

Here’s my take on what you need to know and how to best prepare in the event ours and the global economy tanks. And as always there is a silver lining but only for those who are prepared.

So, my advice – be prepared because if you haven’t you need to start and if you don’t you could very well get fucked over sooner rather than later.

Coronavirus case study

Coronavirus has had China on lock down with 750 million people in quarantine since early January which has led to serious global consequences, especially for Australia.

In the education industry alone, we’ve lost 1.2 billion dollars in tertiary fees because students aren’t able to attend university and won’t be paying for the first term.

In fact, it’s expected to cost the economy billions of dollars having impacted industries such as airports, airlines, travel agencies, casinos, accommodation, education and major retailers that rely on stock from China.

The latest reports from CNN say the death toll for the disease has now risen to 2698 world-wide, with the number of global cases sitting at 80,000.

The significance of this is being felt all over the world, with the fragility of the economy buckling under its weight.

The Dow Jones Industrial Average sank more than 1000 points overnight on Monday and global markets wiped off $2.5 trillion as the virus continues to smash the global economy.

Australian stocks have also suffered with over a whopping $130 billion dollars wiped off in the last 48 hours alone.

The biggest effect will be in full force by March with all public companies having to report their earnings for the quarter.

The Guardian reports that The International Air Transport Association, which is the trade body for the global airline industry, says falling passenger demand would cost the airline industry $29.3bn in lost revenues this year, with global air travel expected to fall for the first time in more than a decade.

Furthermore the publication says there are also concerns for global supply chains such as Jaguar Land Rover who warned last week it could run out of car parts at its British factories by next week.

In other reports Nike Inc and Adidas are among the growing retailers closing a number of stores due to the impact on operations.

According to Fortune.com, Apple said on Monday that the Coronavirus outbreak has slowed its supply chain and impacted sales worldwide.

Economists are yet to quantify the giant magnitude of losses to come as authorities desperately try and get the virus contained.

You just have to look at China’s role in the global economy. It’s a country that produces 80 per cent of the world’s electronics. At the moment nothing is being produced.

I’m quite shocked that no one is talking about this more.

We’re about to feel the ripple effect of what happens when China shuts down. I anticipate certain sectors, or at least certain countries going into some level of recession because of this interruption to production and also distribution.

If you stop eating for a couple of months, you’re going to lose some weight.

How to safeguard your business

But regardless of the financial fallout the Coronavirus is causing, if you’re in business you have to be prepared because if and when some sort of recession hits the only way you will survive is by having a war chest.

Everybody needs to be building a war chest. This is access to a level of liquidity that in the event of a shit storm, it enables you to be able to function and trade – whatever that looks like.

Because I’d say most businesses in Australia are either in a neutral or in a negative cash position.

The question is, ‘How long could you stay in operation for without a sale?’

Most businesses will probably answer that question by saying a week or two. Others might only be able to manage for a few days.

For us, we could operate for the next seven or eight years under restructure. Would I do that? Who knows. That would depend on the situation and the market, but the point is we are in a position to respond.

Respond or collapse

We are able to respond to an emergency.

A recent example – Coronavirus hits and we’re about to go on an international tour for The Fast Growth Summit Social Media Series. I’m taking my team in and out of airports across Australia and offshore – right in the middle of a virus breakout. But thankfully we’re in a position to respond and I can drop $5000 on masks for everyone to get us through airports safely.

If you don’t have a buffer then you need to look at addressing what your baseline costs are and then have a schedule of what needs to be cut immediately if something was to happen.

What are the things that you can cut in an instant so you can focus on your top line and stay operational?

Do you know where you can cut the fat fast – be it at a subscription, contract or supplier level in order to maintain equilibrium?

Part of being a good leader is making sure you have a safe boat when a storm hits.

Because most leaders are literally sailing through the ocean in a tin boat and the moment a storm hits, which it more than likely will, the boat goes down.

Part of being a good leader is making sure your team has a safe vessel / environment to work in.

Start by ensuring you’re in a position to respond if the market takes a turn – that means having a buffer and knowing when and how to trim the fat in order to stay afloat.

Recession breeds opportunity

It’s not all doom and gloom.

If you’re smart, you can take advantage of the market should a recession hit.

Work towards being in a position to optimise the opportunities that come out of recession environments because people who are sitting on the ability to act are the ones that acquire assets and inventory.

Because when things start to go crazy everything is going to go on sale.

Property is going to be on sale, cars are going to be on sale – assets of all shapes and sizes will be on sale and those who are in a position to act will come out very VERY well.

You must act now

No matter what situation you are in, you need to be aware that there are major market shifts at play and if you’re not prepared you are in for a rocky ride.

If you have any hope of coming out the other side in one piece you need to start acting now by getting your business in a position to ride the wave.

Everyone is at risk and no industry will be exempt in the event of a global crisis.

And when it comes to Coronavirus we still can’t begin to understand just how much damage will be caused.

But it’s better to act now then not at all.

Think smart and start thinking ahead because the better you plan and prepare, the better your chance of survival.