How to run a business during wartime?

This article was written during wartime.

My heart and thoughts are with those who lost family members and friends. My condolences. I pray for the swift return of the hostages and wish the wounded full recovery soon.

Life continues and businesses continue to operate. I have recently been asked many important questions regarding the correct way to operate a business in the face of the current difficulties and obstacles.

Links to articles regarding how to function during a crisis, especially during Covid, can be found at the end of the article.

Cash flow, employees, and strategic planning

Businesses are facing two major challenges these days: Cash flow and Employees. At the same time, businesses must also plan the future. They must think not only of how to stay afloat, but what must be done today to create a new, successful future for the business.

Various kinds of businesses

Not all businesses experience the same problems. Different types of business face different challenges. I shall relate to the various types and challenges.

Cash flow

Money is the oxygen of every business. During crises, like the Covid pandemic, the 2008 economic crisis and now, the current war, our customers may have difficulties paying their debts or placing new purchase orders. This may cause our business significant cash flow problems. However, every crisis also presents opportunities. I will talk about them towards the end of the article.

There are some businesses that experience extra work these days. For example, an Israeli firm which manufactures high standard, high quality Bulletproof vests.

However, most businesses face the following problems:

Actual Revenue or debt collection:
Try to realize money owed to you. Be assertive but sensitive to your customers’ situation, especially if they operate in southern Israel, near the Gaza strip or have management members who have been called out for army service under the emergency order (Order 8). Act with determination but be considerate.
At the same time, beware of companies that try to exploit the situation and ask for payment delays even though they experience no hardship (a situation that occurred during the Covid pandemic). Remember that those who owe you money today, will remember your kindness and may become your most loyal customers in the future. Reconsider your business relations with customers who delay payments unnecessarily. You may prefer to stop your business with them.
Pay on time.
Be fair with your suppliers and pay your debts. Try to pay on time. You will want to continue working with them after the war is over.
Update your suppliers.
Give your creditors due warning that payments might be delayed. Don’t leave them expecting payments in vain. Call them, share your situation, set a payment date you estimate you will be able to pay. Big suppliers, whom the business relies on, should be approached by the CEO in person. The CEO should personally phone a senior management member of the supplying company to inform them of the business difficulties. Reach payment agreements that will ensure continuous supply. The same should be done with the banks. The CEO should inform the bank of the financial issues the business is facing. My advice is to initiate the conversation. Call your creditors before they call you. Keep them informed. Don’t hide away. These actions will help you keep your credibility.

Employees

Three situations may occur in regards of employees:

No change to routine work. (Usually, if the business is defined an essential establishment)
Employees are unable to reach the business site because of the conflict.
The business has no sales or incoming orders. Employees must be fired, sent home on paid leave or furlough. In this context we must remember the difficulties and costs of hiring, training, and maintaining new employees. Businesses who had managed to keep their work force through the Covid pandemic benefitted from their employees’ loyalty in the long run.

Keeping the business going is as difficult during this war as it was during the pandemic, and I find my customers describe similar challenges.

I shall now relate to the issues I was asked about.

Absenteeism and termination of employment:

It is illegal to fire an employee who was absent from work following instructions by the Home Front Command.
It is illegal to fire an employee who was absent from work to look after a child under 14 years of age, who stayed home due to the shutdown of the education system, following instructions by the Home Front Command. This clause applies to one parent per family.
Rules regarding children with special needs are different and should be checked on site.

Essential establishments

Attending work at essential establishments is mandatory. Absenteeism is considered a criminal act, (including for parents of children under 14 years of age).

Government Compensation to employers for employees’ absenteeism

In principle, employers are entitled to receive government compensation for money paid to employees who were prevented from attending work due to instructions given by the Home Front Command.

Forced vacation and furlough

Sending employees on forced vacations or furlough is legal. The number of absent days may be legally deducted from the employee’s entitlement for annual holiday allowance.
An employee who has no holiday allowance left, may be forced to take time off work but must be fully paid as for holiday time.
Sending an employee for unpaid leave of absence is subject to the employee’s consent.
Forcing an employee to take unpaid leave of absence without consent may be considered as forced vacation and may justify termination or
According to a president verdict by the National Labour Court, sending an employee on an unlimited or very long unpaid leave of absence can be considered termination of employment, which entitles the employee to receive an official hearing before dismissal, severance pay, and other payments due for termination of employer/employee relations.
Sending an employee for an unpaid leave of absence for a limited period, especially during crisis, may be considered suspension of employment and not termination. However, the National Labour Court has not yet issued a clear verdict on this issue.
In any case, sending an employee on unpaid leave of absence is considered a major deterioration of work conditions. Employees who choose to resign for reasons of deterioration of work conditions are entitled to receive severance pay. However, they must inform the employer of their intention to resign due to deterioration of working conditions to enable the employer to renege from his decision to send them on unpaid leave of absence.

Unpaid leave of absence: Approvals and special cases

No official approval is required if employees consent to take unpaid leave of absence.
The law regarding pregnancy and maternity leave is applicable at crises times as it is during normal time, including unpaid leave of absence.

The above are examples of the most common issues employers face at time of crisis.

Remember, always act in accordance with the law and regulations.

Strategic future planning

Things will not be the same when the crisis is over. No doubt the business world will change. It is important to take the initiative and look for new opportunities.

Don’t be passive. Don’t only think of how to respond to the current situation or how to survive it. Think actively, initiate new ideas, examine new opportunities.

War is bad , but like all crises, it changes the business reality and may create new opportunities. As CEOs you have the responsibility to examine these opportunities and act upon them.

How to identify new opportunities?

Brainstorming:
Gather a group of seven to nine team members from various disciplines to think of new ideas. Follow the steps.
Sorting and Prioritizing:
Sort out the best ideas, list and prioritize them (using the chart in the above link). Don’t reject innovative or revolutionary ideas just because they seem strange.
Economic feasibility:
Consider the economic feasibility of the ideas and the economic benefits they might have on the business. Ask what values will the ideas add to the business?
Implementation:
Assess the ways to implement the ideas you have chosen.
On your way:
Examine one initiative at a time.
Chose the best initiative for your business. Work step by step.

Summary and recommendations

War has been imposed on Israel. The local business world is shuttered and there is real danger that some businesses will not survive the crisis. Israeli businessmen are facing two major challenges. They are also forced to think of the future.

The two major challenges Israeli businessmen are facing are: cash flow and employees.

Cash Flow:
Collect money owed to you. Be Assertive but sensitive and considerate. Some of your customers currently face financial difficulties especially those who operate from southern Israel or next to the Gaza strip. Customers who owe you money used to be good paying customers before the war and will be good paying customers after it. They will probably be more loyal to your business, appreciating your consideration.
Reconsider your business with customers who exploit the situation and unjustly avoid payment.
Pay your debts. If you are unable to pay on time, inform your creditors. Always call them before they call you.
Shortage or surplus of employees:
Read more about employers and employees during Operation ‘Iron Swords’.

New business opportunities:

Actively plan the business future strategy. Adjust the business to the new situation, initiate and examine new opportunities. Explore new niches and create new horizon for the business.