The unprecedented impact of the Coronavirus will certainly be the subject of countless articles during the following decade. After all, there’s much to be learned from this event in a variety of fields. Economists, epidemiologists, lawyers, and business owners will all approach the subject from a different angle. Undoubtedly, many of those conversations will involve financial planning and economic impact.
As I look at the nation, after over a month of lockdown, the most obvious thing I see is the lack of sound financial planning. From the individual to the federal government, this event has exposed a gaping hole in our ability to plan for disasters. Of course, it’s easy to say that nobody could have predicted a pandemic – so how could we prepare? But countless disasters happen every single year. Earthquakes, floods, hurricanes, tornados, winter weather, and extreme cold are common events that could easily bring harm to a business or family.
Furthermore, sound financial planning has always said you should have six months cash on hand. That’s wise advice for individual, corporate, and government financial planning. Yet, within a week of the lockdowns, people were lining up at food banks across the nation. Surely businesses would be better prepared. Right? Sadly not. Within short order, the government opened loan programs to keep businesses from failing. Even worse, the government itself was unprepared and an extra 2 trillion dollars was added to an already unsustainable national debt to deal with the virus.
From one end of our nation to the other, nobody had any money in the bank to weather a week long storm – let alone a months long shutdown. And, sadly, I think we’ll see innumerable businesses lost in the fallout of this national disaster.
How can we – the business community better deal with these kinds of events in the future? First, we obviously need to ensure that we have adequate cash on hand to continue to meet our financial obligations even if we are unable to conduct business. Second, we need to find creative ways to operate our businesses using eCommerce, cloud systems, or other technologies that can operate even during a disaster. Third, we need to encourage everyone – at all levels – to put money back for a rainy day. We may not see another plague in our lifetime, but we will undoubtedly see other disasters.