That the novel Covid-19 pandemic caused by the Coronavirus has disrupted business globally is an understatement. We now live in what has come to be referred to as the “new normal” …with uncertainty becoming the daily constant.
Many sectors of the global economy have been completely paralyzed.
As a small or medium business person you may be wondering;
“If entire economic blocks have been shaken to the core, can I salvage and revamp my business?”
The answer is a resounding YES!
After reading this you’ll see that amidst the crises, business revival is possible. Your business can “rise up and walk” again…and again play in the league for which it was known.
You can’t wait to discover the 6 life-changing recovery tips for your small business. But before that let’s briefly get acquainted with the actual problem created by the COVID-19 Pandemic so as to fully appreciate the solutions.
Pain Points of Coronavirus: Covid-19’s Impact on Doing Business
#1 Affected Global Trade
“No man is an island”.
That’s obvious. But the Coronavirus Pandemic has amplified that fact.
Economic projections by the World Bank & International Monetary Fund indicate that we are starring at what is perhaps the worst economic crisis in recent history. It’s a catastrophe of apocalyptic proportions.
The interconnectedness of business and globalization has made us interdependent. Consequently, the international movement of people and cargo has been affected by border closures, effectively disrupting global supply chains.
This has been worsened by restriction of movement imposed within a country’s borders.
Importers and exporters no longer enjoy the liberty and liquidity to trade like before.
The revenues of logistics companies that offer transport by air, rail, road, and sea have taken a significant hit.
#2. Impact on Entire Industries and Sectors
Businesses associated with sports, tourism, aviation, education, and strangely even health have been subjected to the harshest possible economic shocks since the Great Depression of the 1930s with four out of five jobs affected globally by the virus.
And that’s not all.
These industries do not operate in isolation. The impact of the collapse in one sector has incontestable ramifications in other sectors.
Some of these sectors, that have borne the biggest brunt, appear to have suffered near irreparable damage in the short term, e.g. the aviation and tourism industries.
Their business outlook seems immensely bleak.
This makes the recovery strategy for such sectors even harder. It will comprise substantial capital re-injection, industry waivers, and concessions, and extremely delicate discussions among industry stakeholders and governments.
#3. Human Resources
Devastating death from Coronavirus-related complications has robbed companies of multiple business owners and workers.
Contracting business and redundancy of certain jobs has exacerbated the existing unemployment crisis.
Observance of social distancing and the “stay at home” or “work from home” slogans have become the constant creed of the global Covid-19 containment measures. The infected and affected workers who’ve been quarantined rob your business of an essential workforce.
Here is a summary of the key pain points;
- The added costs of maintaining safety at the workplace for workers and clients,
- Lower productivity due to shorter working hours where curfews have been imposed,
- The inability of workers to travel freely to discharge their job roles due to travel restrictions,
- Salary reviews due to depressed business and
- Forced leave.
Now, here is an indispensable tip to help you mitigate these challenges;
Draft a simple Succession Plan for your business to improve the chance of business continuity at the workplace in the event of the absence of key business drivers.
A Business Succession Plan is a strategy of identifying future leaders for your company and developing them for the intended leadership roles should they fall vacant.
#4. Contract Jobs for Smaller Businesses from Corporates
You may find your business failing to discharge its contractual obligations due to liquidity challenges. This can result in a breach of contract, loss of business, reputation risk, and even crippling lawsuits.
The concern here may unfold in two scenarios:
Your corporate entity is unable to continue works on an existing project or is discontinuing some of its own operations. This negates the services of some companies that have a contract with you.
You’ll need to negotiate with them to formulate an amicable exit strategy from those existing contracts
Your business is unable to fulfill its contractual obligations due to prevailing business dynamics, e.g. your company is unable to supply raw materials to a factory of another company.
Whatever scenario you’ll confront, seek advice from your attorney so as to safely navigate potential legal landmines.
#5. Shrinking Government Budgets on Development
In the foreseeable future, governments will receive reduced revenues from businesses that have regressed and individuals who lose their jobs.
Decreasing government revenues signal the adoption of austerity measures to cut back spending. This means budgetary allocations will be primarily focussed on recurrent expenditure and the most essential services to citizens. Budgets for development projects will be sacrificed.
Since governments are the biggest single spender in most jurisdictions, contraction of Development Budgets will disproportionately impact small and medium businesses that depend on contracts arising from such projects.
Your business may be affected directly or indirectly.
Directly, if you have such direct contracts with the government on some development projects such as road expansion where projects may be terminated or deferred.
Indirectly, if you offer a business service to others servicing development-related government contracts.
6 Realistic Solutions to Revamp your Business
#1 Re-thinking the Company’s Strategic Focus
The shifting consumer preferences necessitate a rethinking of what you do and how you do it.
You may have to rewrite your company Business Plan, redefine your target markets, and recast sales projections. This is because plunging incomes and inflation have tremendously diminished consumer purchasing power and affected their purchasing behavior.
A business plan describes how your business will work, and your role in making that happen successfully. You’ll need to redefine the nature of the business if need be, the marketing and sales strategy, and a fresh projection of your financials in view of the current Coronavirus Pandemic.
#2 Managing Your Employee Costs
Desperate times call for desperate measures.
Market dynamics, reduced business, and changing customer behavior may render some work processes redundant
Cost-cutting initiatives that may lead to job losses or reduced salaries may be painful but necessary. While so doing, remember to be humane and lawful…not inhumane and awful. Always remember that though you cannot afford them today, you may need them tomorrow.
In the meantime-Outsource.
Envisage the outsourcing of certain functions to lower your staff costs
A classic example would be outsourcing a writing job to professional freelance article writers or bloggers to produce customized content for your online platforms.
You’ll get effective reach by expert writers who can drive traffic to your website and convert sales. These are professionals who’ll effortlessly inject best practices into your business.
Secondly, you’ll only pay an equivalent to the professional services rendered.
#3 Business Location & Floor Size Matters
Consider your premises.
Is your location still ideal despite the fluctuation in business and consumer preferences?
If yes, would you consider less floor space for lower lease payments? This will directly impact your operating costs for an improved bottom line.
If not, how about this;
Renegotiate the lease agreements with your landlord on the basis of reduced business. Let them see the challenge you’re experiencing in paying the current rent installments and agree to some workable amount. A sincere conversation might just bring in unimaginable results.
If that doesn’t work then, where possible, contemplate subletting portions of your floor space to compensate for lost business.
Always endeavor to operate within the confines of the law.
#4 Have an Eye for Emerging Opportunities & Grab them…QUICKLY!
Every cloud has a silver lining…but you must be hawk-eyed to spot it!
I can see two windows of opportunity.
Come let’s explore
a) Diversify your Business to Refocus on Sectors with Strategic Government Support
Government policy to be self-sufficient in production has led to capacity building and incentives in manufacturing. Strong local industries effectively exploit the gap in the supply chain as a result of border closures and restrictions in movement.
Check if your government policy promotes local substitutes for imported products, particularly for health care. Many exporters are overwhelmed by existing or anticipated demand for medical equipment in their markets and are thus cutting back exports.
b) Reduced Competition
Some competitors will close shop.
Others will shift to other localities or concentrate on fewer products dropping some lines from their business.
Capture viable emerging opportunities by adopting clients who have been “orphaned” by the closure of businesses. You can develop new loyalties from these, turning lemons into lemonade.
#5 Liquidity Management & Recapitalization
Take advantage of economic stimulus packages for sector-specific support from the government and other business support agencies.
Take advantage of loan restructuring by banks to pay interest alone on your debt financing facilities until business rebounds. You may also reduce the installment payments to a manageable amount to get some “breathing space”.
Lastly, you can renegotiate terms with suppliers for extended credit terms to free up extra cash to be plowed back into the trading cycle.
#6 Online Marketing
Develop efficient alternate delivery channels to reach a bigger clientele base on platforms like YouTube, Facebook, Twitter, Whatsapp, or Amazon.
It’s not enough to merely have an online presence on these channels. Make it efficient and work. You can’t afford to just open a retail store down the road and automatically expect success. It takes deliberate skills, effort, and consistency.
The need to stay safe and observe social distancing guidelines has led to many customers preferring online services. Optimize in adversity by winning the client right where they are.
In business you must realize that it all boils down to ONE word;
Online business channels are platforms where you gain visibility by posting powerful content that reverberates with targeted clientele, with one indispensable aim- to convert clicks to buying decisions thus generating profit.
If executed well, this strategy could increase your customer loyalty through enhanced online brand visibility and yield better customer service through superior experiences such as home & office deliveries
One more important fact.
Check what your country’s Covid-19 containment measures to promote online business are and leverage on it.
Perhaps online service providers are compelled or incentivized by their regulating authorities to lower their tariffs or expand their network and improve its quality to accommodate increased online traffic.
Crafting a workable course of action from the 6 recovery tips for small businesses will cut costs and improve liquidity for you.
Pursuing a vibrant and versatile digital delivery alternative will be a key arsenal just awaiting deployment to deliver the much-desired revival for your business.
Despite Covid-19’s disproportionate impact on small and medium businesses, you must exude optimism that you can still rebound, and live to tell the tale.
You can scale new heights and go on to explore dimensions that were hitherto beyond your consideration.
Go for it. YOU CAN DO IT!!