Following a crisis event, the immediate reaction of many business owners is to restore their business back to normal operating levels as soon as possible.
However, a post-crisis environment is anything but business as usual for you, your employees, key suppliers or customers. Therefore, it may be prudent to take stock and reflect on your options before taking any next steps.
Assessing the impact of the crisis on your business will greatly assist in the process of weighing up your options. It also provides the basis for investment in your recovery planning as well as investment in how you will deal with the next crisis event.
Three key areas to assess:
- Impact of business interruption
- Financial health of your business
- Physical damage to your property.
Assessing the impact of business interruption
Traditionally, disruption of business functions and processes is the main impact of a crisis event on most tourism-related businesses. If you haven't already developed one, consider preparing a business continuity plan for next time.
Building upon your initial impact assessment undertaken during the response phase, identify and document the operational impacts resulting from the disruption of business functions and processes.
Impacts to consider:
- Lost sales and income
- Loss of forward bookings
- Cancellation of existing bookings
- Delayed sales or income
- Increased expenses (for example, overtime labour, outsourcing, expediting costs)
- Regulatory fines
- Contractual penalties
- Customer dissatisfaction
- Delay of new business plans.
As part of this assessment, you should also identify the time-sensitive or critical business functions and the resources that support them. These should become the priorities for recovery and resources.
Assessing the financial health of your business
Knowing the financial health or financial position of your business will give you the information you need to determine whether you:
- can afford to get your business back to the way it was before the disaster and how quickly you can do this
- should expand, shrink or even close your business.
Assessing the financial health of your business can also assist you with making claims for insurance such as business interruption insurance.
To evaluate your financial position, collect all business records that have been salvaged or kept off-site. Where there are gaps in records, consider alternative sources to help you reconstruct your financials. You may like to talk to your accountant at this stage for assistance.
For more information on how to manage your finances after a crisis, read the CPA Australia Disaster Recovery Toolkit
Cash flow budget
Keep monitoring your budget carefully as the weeks unfold. Compare your actual to estimated results each week, fortnight or month and revise the budget when necessary.
It's unlikely you would have to work through the budgeting steps only once in order to prepare a satisfactory cash flow budget.
The steps may need to be repeated several times to reflect changes to:
- sales and pricing
- bookings and deposits
- the timing of purchases of stock
- the amount needed for borrowings.
Assessing the physical damage to your property
If your property has been damaged or unfortunately destroyed by a crisis event, it's important to conduct an overall damage assessment. This information can be used to make decisions about your recovery priorities.
Begin by preparing a list of destroyed or damaged items, and estimate replacement costs. If possible, include photos of the damage.
Make a list of key equipment, stock and other activities of the business that need to be operational for the business to reopen or get back to normal operating levels. If any of these items have been salvaged during the cleanup, store them in a safe and secure place.
Contact your insurance company and discuss:
- your damage assessment
- level of cover
- how quickly your claim can be processed
- how much and in what form a claim will be paid
- a date when an insurance assessor will visit.
- keep your business and personal disaster loss records and receipts separate
- save all receipts for repairs and replacement of property
- take photos before cleaning up, and make a list of everything that has been damaged.