Studies show that increased screening and safety precautions have cost businesses anywhere from $200,000 to $1,000,000.
When the COVID-19 pandemic first hit the nation, there were many consumers who were predicting that companies and individuals would be saving large sums of money. Although there are some areas that companies have been able to save money, there are many unexpected expenses that people have had to overcome. In this article, we will discuss some of the unexpected expenses that have resulted from the global pandemic.
Increased Screening and Safety Precautions
In the beginning of 2020, no leader would have anticipated the expenses that would result from increased screening and safety precautions. Studies have shown that COVID-19 safety-related expenditures have cost businesses anywhere from $200,000 to $1,000,000,000.
Although many companies offered flexibility in employee schedules, very few companies were operating 100% remotely prior to the pandemic. For many companies, gathering the resources needed to convert everything to a virtual platform was massively expensive. But, the losses recognized by companies that did not quickly convert their technology have been even greater than the initial investment.
Cancellation of Events
As a result of the pandemic, it was anticipated that larger companies would experience losses. We see Delta Airlines massive revenue decreases and Tesla’s negative earnings forecasts, but what we do not see is all the money that has been lost due to the cancellation of events. Many of the large events taking place for the entirety of 2020 have been cancelled. Not only is the revenue from events deleted, all of the deposits and initial fees that were used to reserve venues and vendors are sunk costs.
Many businesses have an increased need for human resources and IT professionals. Hiring experts and consultants on an hourly basis can be a big expenditure. Human Resource specialists are needed to ensure that safety precautions are in place, employees have the resources needed to work from home, and to guarantee that all CDC guidelines are regarded. IT professionals are needed to ensure that each employee has a smooth transition to virtual work. In addition, the increase in virtual programs causes an increase in virtual problems. IT specialists are needed quickly and frequently to troubleshoot the technology issues that companies are reporting.
Due to the massive expenses and revenue losses resulting from the coronavirus pandemic, many companies have had to execute on money quickly. Typically, businesses have the option to invest money and keep healthy reserves of cash. In times of downturn, money must be acted upon quickly. When revenue is down and net earnings fall, the overall reputation of a brand is lessened.
Businesses are facing many difficult decisions financially. There are many corporate expenses that were not accounted for as fiscal year budgets were determined. Remote technology and safety precautions were a massive outbound cost. Business owners are faced with daunting decisions as they determine how to execute on funding and what additional professionals are needed on the payroll. Many business owners have learned that it is important to diversify revenue streams and enact plans that will secure the business even in the most unexpected times. 2020 will be a year of learning and of growth for businesses across the world.