H1N1 Influenza versus Small Business

CxO To Go conducted a survey concerning the potential impact H1N1 could have on companies. Of those surveyed, 72% have not undertaken any financial modeling to see what may happen if disaster strikes. We certainly hope it does not get bad, or small businesses especially may be in for trouble. Over 75% of the respondents were senior executives, business owners or presidents of companies with less than 60 employees, and with annual sales less than $10 million. We also received some great comments both on the survey and from various LinkedIn groups. Companies of this size are the backbone of our country and therefore more highly affected when too many employees, customers, clients, and suppliers fall ill for any reason. Large organizations can absorb the temporary loss of some number of their people, but it may devastate a small business. Small business owners who have 4-5 people out with the flu (regardless of the type of flu) 15% to 50% of your work force is out. We were surprised that the majority of our survey participants, 67%, felt that H1N1 will have no or very little impact on their company. Only 11% felt that this virus would have a significant impact on their business. We wonder if people would answer differently if we had asked, "What would happen to your company if a 2-foot snowfall arrived for several days next Tuesday night. Business owners need to consider what happens when an unplanned catastrophic event occurs. In our survey, 28% felt that they should prepare for a H1N1 outbreak, and almost 40% of the respondents felt that their company was prepared. Each person carrying H1N1 will typically infect 10% of their co-workers, because of their close working environment. Small companies are more at risk trying to protect their human capital. For example, we have heard about a small software development company where every one of their team came down with a nasty flu, which shut down the company for over a week. The end result was that the company shortly went out of business. Each season we have the flu, and the H1N1 is an extremely aggressive type of influenza. People generally feel that it will not affect them, if they do not know anyone who has contracted the virus. Yet, if they know a co-worker, family member, or friend who has missed weeks of work, they then believe that this new flu will have a major affect on their lives. As with any abrupt change in your company's daily operation, executives should know in advance what to do. Our survey shows that 17% have done some modeling to understand the impact H1N1 would have on their business. More shocking to us, only 11% of the companies have done any financial impact modeling to understand what the virus could do to their business finances and cash flow. We received many comments in our survey. One comment said they had to cancel their business appointments, because they had to stay at home with a sick child. What if most of your sales people or fulfillment people were out for a time? If you are just guessing at the answer, what if you are way off? Wouldn't you want to really know? One respondent said that 25-50% of their clients were off work or recovering. If 25-50% of your clients could not pay their bills for an extra 30-60 days, what impact would that have on your company's cash flow? By how much? You don't know? A seat of the pants response will not give an Owner/CEO the insight needed for decision-making. Preparedness is the sign of a strong management team. Some companies are taking steps to become Dr. Mom and teach their employees how to maintain a clean and safe environment. Anyone traveling the country or around the world will be more at risk. The smaller your organization, the more influence H1N1 or any type of flu will have on your organization. In a year from now, we may say that the H1N1 scare is just like the Y2K scare at the turn of the century. One person commented that H1N1 is just FUD (fear, uncertainty and doubt) and that they will not be doing anything to prepare for what they believe is a non-event. To ensure that Y2K wasn't a problem, companies spent years preparing for the worst and it didn't happen. If they had not prepared for the worst, and did nothing, what would have happened? For an attack from such a virulent flu, you can prepare now and continue to refine your company's plans each year to ensure your success. Will you be the 10% that are prepared? We hope so. Helpful reference links for small businesses: http://www.flu.gov/professional/business/smallbiz.pdf http://chamberpost.typepad.com/files/smallbusinessh1n1guidever2.pdf For a complete copy of the CxO To Go "H1N1 Impact Survey for Business", click here.