The destructive effects of the coronavirus pandemic have forced businesses to face some hard truths. For starters, many companies have realised that they might not be able to weather the storm, whereas others have accepted that the only way to make it through is cutting costs and laying off employees.
The businesses that have managed to survive so far have learned to do less with more. They have had to get by on the limited resources available to them and consider new, more effective directions than those they were accustomed to before the pandemic. They’ve scaled back some of their projects while focusing those most likely to bring back traction.
Even though most countries are out of the first wave of this pandemic, there’s still no telling how things will play out for the months to come. Will there be a second wave? How long will it take for the economy to recuperate? These are questions no one has the answer to.
As a result, given the uncertain times that lie ahead, businesses need to do everything in their power to stay afloat. Here are a few tips that can help with that endeavor:
Begin with the finances
Since most companies’ finances have taken a thrashing from this pandemic, companies should take the time to assess the situation and figure out how to manage their cash flow in the upcoming months:
Analyse the situation
Any business has to keep a close eye on two things: where its revenues are coming from and where it is spending money. However, this obligation is all the more necessary during this pandemic.
On the one hand, the sources of revenue are bound to shrink drastically. After all, several clients might fail to meet their financial obligations, and it will be even more difficult to close new deals or get new customers.
On the other hand, companies need to take a deep look at their expenses, figure out their burn rate, and see how they can reduce these costs, at least for the short term. Cutting costs is one way to cut avoidable expenses, as are excess marketing, rent, and anything else that won’t harm the company’s product or service.
Obviously, businesses should cut perks and benefits enjoyed by top executives. Before deciding to let go of good employees, companies need to make sure that they are already as lean as possible. Some businesses may avoid laying off employees with the help of pay cuts, employee job sharing, a reduction of hours, or the temporary abolishment of overtime.
Talk with creditors
During the pandemic, another element that might stress a business’s financials is debt. After all, with stunted cash flow, businesses are going to have a harder time meeting their obligations.
Consequently, businesses need to manage their debt. This means paying off existing debt before considering any other expenses.
And, should a business have a hard time with that, they need to have a difficult talk with their creditor and notify them of the situation. The clearer a business’s debtors are on the situation, the easier it will be for the business in question to restructure the debt or to defer it to some later debt. After all, any debtor would prefer to be paid later than never at all.
Take advantage of governmental support
Governmental support is one potential supplement to a business’s revenue streams. It is all the more prevalent as governments all over the world do everything in their power to help businesses carry on, including injecting money into their economies.
A lot of this aid is directed towards small businesses and can help with both ongoing costs and paying back creditors.
Adapt to the new conditions
It’s not enough for a business to cut a few discretionary expenses here and there; companies also need to adapt to this new reality:
Adapt to new market trends
The current pandemic hasn’t only had a profound impact on the economy; it has also altered the market trends, making them much harder to predict or even understand.
However, this tectonic shift represents an opportunity for most businesses. They can reposition themselves and capture a previously unavailable market segment.
For one thing, businesses that operated through brick and mortar stores can now explore selling online. If anything, this has been a necessity for most companies to survive, and the majority of businesses that have thrived during this pandemic are those that operate online. Just look at how Amazon has fared over the past year.
If a business doesn’t know how to sell its product or service online, the least it could do is use this channel to engage with its customers and foster connections.
The coronavirus has presented the world with plenty of downtime, something businesses should make the most of. One way to do so is to train employees. For instance, a company might be able to provide remote-working teams with online courses, enabling each member to upgrade their respective skills.
If a business is worried that training might be a cumbersome expense, one it is not capable of handling right now, it is also worth remembering that training is one of those things that pays generously in dividends.
Learn how to market differently
Many businesses have had to shrink their marketing budget due to the pandemic. For some, this has been a death knell, but, for others, this has been an opportunity to find new and innovative ways of reaching their customers:
Focus on client outreach
Businesses have had to get creative over the past few months, which will probably continue into the future. For instance, customer referral programs and social media contests have recently been very prevalent.
Businesses should narrow their focus on the most profitable customer segments. To that end, they may rely on business intelligence solutions or other similar data-driven approaches that help save money.
However, the most important thing a business can do is build and strengthen its relationships with its clients. This means keeping a constant connection with them and serving them in any way possible.
It also means listening to customers and trying to discern whether they are changing their thinking. Are their needs shifting? Will they still prefer making their purchases remotely even after the pandemic is over?
Answering these questions and more will enable businesses to tweak their business models enough to weather the crisis.
Look to the competition for ideas
If a business feels that it has no idea what to do during these difficult times, it can look to the competition for inspiration. By studying competitors who seem to be thriving the most, businesses can learn what strategies might be optimal in the current situation.
Better yet, businesses can look at thriving companies in other industries to find transferable practices.
Another way businesses can stay afloat is by joining forces with other similar organisations. Small restaurants might consider partnering up with retailers who could sell prepared meals. Flower shops and home décor are another example of such a partnership.
Ultimately, it is all about building the right community. These connections give the business perspective and open new opportunities. Moreover, these partners can offer valuable counsel in times of need.
Plan for the future
Many of the businesses that went under failed because they were unprepared for such a black swan as the pandemic. Since they had neither a contingency plan in place nor enough reserve cash to help them through, they were compelled to close up shop.
Have a continuity plan
Businesses must develop solid plans for operating under uncertainty beyond just the financials. They must have the necessary tools for employees to work remotely, such as providing them with safe ways to share and store company information.
They should have several contingency plans in place. For a retail store, this will entail familiarizing itself with selling online and implementing different channels to keep the revenue flowing in.
In short, businesses must be flexible when it comes to their operations.
Plan for the worst-case scenario
To avoid being taken by surprise in the future, companies need to prepare for multiple possible scenarios, particularly the worst-case one. This concerns more than just the pandemic. Instead, it should be a habit that carries through for the rest of a business’s life.
To prepare for different scenarios, businesses should ask themselves simple questions such as: what other factors could go wrong? What would happen if all the business’s data was lost? Does the company have a data recovery plan in place, or will this spell bankruptcy?
It’s important to realize that the struggle is still not over
As mentioned earlier, there is still plenty of uncertainty in the days to come. Nevertheless, even during these times, business owners can do plenty to keep their business afloat. But, what’s more important than the actions of business owners is their outlook.
If a business owner remains positive and works hard to survive, their probability of making it through is much higher than if they gave over to pessimism and became convinced that their survival was not in their hands.
Although luck does play a part in who gets to make it and who doesn’t, it is paltry compared to dedication, commitment, and perseverance.