By Shruthi Nair
If you are overwhelmed with all the coronavirus updates coming from the world on an hourly basis including the increasing numbers of infected patients, plunging markets, wavering economy then you are not alone.
On Thursday we heard that UAE residents have been asked stay home unless absolutely necessary between 8pm and 6am amid a mass sterilisation drive to combat the further spread of the coronavirus or face penalties – detailed list of penalties in the next video.
During these challenging ambiguous times, I know a lot of you have a lot of questions. Business owners are still reeling in these developments as they continuously unfold largely especially because SME owners never really are prepared for the worst.
Here’s a few tips your protect your business from such unforeseen circumstances:
1. Review existing business contracts and employee contracts
Add a well-drafted ‘force majeure’ clause to your business contracts, if you do not have one already. Appoint a good legal consultant and have all business and employee contracts carefully reviewed.
2. Create a contingency plan
A contingency plan is not a ‘business continuity plan’. A contingency plan covers a business for situations like the current one when there is no revenue being generated for whatsoever reasons and the business needs to be kept afloat.
Contingency plans usually include foreseeing alternate ways of generating and retaining incoming revenue whether you work in-person or online.
3. Pre-empt a contingency fund and a reserve fund
Under the Federal Law 2 of 2015 on Commercial Companies, ‘a Limited Liability Company shall set aside in every year 10% of its net profits to form a legal reserve. The partners may decide to stop such deduction if the reserve reaches half the capital.’
In addition to this, businesses may opt to create a voluntary reserve or a contingency fund setting aside a small percentage of net profits every month that can come in useful for situations that adversely affect the business.
4. Bring out the insurance policies
Legal risks can be addressed only by having a really robust contract or a very good insurance policy in place. Apart from these two options, a business may only rely on available remedial measures if, and when adverse situations occur.
Now, it’s that time of the year when we dust off our insurance policies, buffer them up, understand the claims’ process. Some policies one needs to be reviewing include business interruption, credit, third party/public liability, product liability, professional indemnity.
(Source: Arabian Business YouTube channel)