The global Covid 19 pandemic has caused a financial earthquake of at least 9 on the Richter scale. Within weeks of the outbreak, hundreds of thousands of business owners in Israel found themselves in distress due to a halt in operation or orders, immediately reflected in a sharp cut in revenues. Even in ordinary times, many enterprises in Israel are run in precarious conditions, with credit lines stretched to the limit and negative income to expenses ratios. The current upheaval could easily push them over the cliff.
This may sound cruel, but paradoxically the pandemic has forced business owners to shut down certain activities (and stop losses) or put in place drastic recovery plans. The problem is that this crisis is also hurting healthy and profitable businesses which have simply been disconnected from sources of income. Sectors such as tourism, events, entertainment, to name only a few, are today paralyzed by the circumstances and not as a result of managerial failure. What can they do?

Reduce Unnecessary Expenses
Since this period is characterized by uncertainty, we can’t claim to have a magic cure for everything, but there are some tips and approaches that can be adopted to help you stay away from the financial void until the storm passes. To put it simply: every business distress is reflected in the income/expenses ratio. So in times of lower or zero income, expenses must be slashed. Every business has unnecessary expenses it can cut, even if this is a harsh measure.

For starters, you need to map all the expenses and get rid of any fat (from the refreshments in the office kitchenette to the vehicle fleet). Having said that, we need to examine whether the expense is truly unnecessary. The ‘unnecessary expense’ test is related to ‘income’. For example, a great many businesses are in a hurry to cut and downsize the marketing department because they don’t see it as a productive unit. It may be the case, however, that the key to revenue growth is actually there.
In general, the toughest dilemma is with employees. Beyond the financial side there is also the delicate human and social aspect. Sometimes a business has no choice but to lay off employees to reduce expenses, but this must be done only after careful consideration. After all, experienced employees are the ones who also have the ability to take the business forward. In this context, the unpaid leave the government is encouraging might be a good short-term solution.

Get Help Expert Advice
Professional guidance can help a business in times of crisis. On the financial side, an expert will help you better map your expenses and make smarter use of existing resources. A knowledgeable, creative consultant can recommend a series of cheap and effective steps, alternative credit routes or take actions such as consolidating loans or using business-owned assets as collateral for a loan on more favorable terms, and other such solutions. On the legal side, a specialized lawyer can help release you from restrictive agreements that carry huge expenses you cannot meet due to the situation or improve your collection process when you need all the income and cash you can get your hands on.
It is true that the Covid 19 crisis is dealing the cards, and yet many small things remain that can improve the situation and, who knows, sometimes even create new opportunities.