Today, many organisations around the globe are trying to come to terms with the impact the novel COVID-19 virus is having on both their employees and their business. The situation continues to unfold, and while the risks are significant, the crisis also opens up areas where companies can build resilience and transform themselves for a post-crisis world. To maintain business continuity and increase enterprise resilience, companies need to be predictive and proactive in their decision-making.
As businesses navigate the ongoing crisis caused by the COVID-19 pandemic, there are a number of key issues corporate leaders should take into account, as well as steps they can take to not only respond to major business shocks now but also reshape their company and plan for the future. Here are five priorities for business to help reshape your firm for growth.
Revise Your Company’s Strategy
Most organisations are likely to face huge disruptions in their day-to-day operations and business underperformance throughout the COVID-19 crisis. At the start of this pandemic, supply chain problems were severe for companies operating in China. But as the virus has spread across the whole world, many more firms are experiencing operational disruptions, as well as significant shifts in consumer demand and behaviour, affecting sectors from consumer and retail to manufacturing and automotive.
Therefore, you need to reshape strategy for business continuity:
- Evaluate your short-term liquidity to predict possible cash flow pressures and intervene in a timely manner. Maintain strict discipline in working capital, especially with regard to the collection of receivables and the management of inventory build-up. During the crisis, make sure to sustain regular contact with suppliers to determine any potential risks;
- Assess operational and financial risks and react quickly. Thus, you need to monitor the increase of direct cost and their impact on overall product margins while intervening and renegotiating new terms and conditions where necessary;
- Identify how the crisis is affecting your budgets and business plans. You need to stress-test financial plans for several possible scenarios to determine the potential impact on the financial performance of your company and estimate how long that impact might last;
- Review overall operating costs. As there is also the issue of short-term capital demands for continuous business operations, the company will need to analyse overall operating costs and consider slowing down or decreasing all non-essential expenses.
Communicate With Relevant Stakeholders
Transparent and timely communications are essential when creating a platform for reshaping the company and providing ongoing support from employees, customers, suppliers, investors, lenders and regulators. It is crucial to sustain open lines of communication and take an individual communication approach for each group of stakeholders.
Change Customer Experience For The New Normal
Nowadays, a completely new scenario is being developed and built in front of our eyes in terms of business and strategy. This transformation will be not only temporary for a more or less lengthy restart phase but also likely to be final.
Did the needs of your B2B or B2C customers suddenly change and keep changing? If the answer is yes, then it’s time to improve your customer experience, quickly develop new products and services that will spread across all channels, with communication plans aligned with this time. Experience and knowledge in digital design will help clients understand and reflect the new needs, challenges and opportunities that arise in this completely new context.
Reallocate Your Capital
While it can be psychologically challenging to do in times of crisis when cash flows are under stress, but now is the time to take some well-considered risks. Research shows that the most successful organisations not only invest more than their peers in new opportunities but also channel more than 90% of net expenses to segments with higher growth and profit margins. These companies understand that the crisis provides a great opportunity to take a new competitive position.
Try to evaluate your projects of capital investments in two dimensions: their estimated value tomorrow (after taking into account the impact of changes) and the amount of money needed to save them today in light of often limited operating cash flows. You can do this at the business unit level, but ideally, you should dive deeper to explore particular operations or initiatives. After completing this exercise, you will most likely realise that you need to radically reallocate your capital investments.
In the current environment, larger firms that are willing to take risks stand to gain the most. Financial markets and institutions will be less able to provide capital to small companies and startups right now. This means that large, established corporations with relatively strong cash flows and greater access to capital will be well placed to take advantage of the opportunities presented by changing demand. However, large companies must be prepared for these risks as increased uncertainty means that organisations cannot accurately predict which type of business will be most successful tomorrow. Rather than hoarding money and agonising over what might happen to a particular sector or geographic region, CEOs should embrace more aggressive and dynamic investments.
Seek Out Government Help
While some organisations have seen limited success in reducing the spread of the virus, their policies have had a severe impact on the economy, especially on the tourism, retail, hospitality and restaurant industries. Fortunately, local and national governments, private non-profits organisations and international institutions provide necessary support during the financial crisis.
Whether you are a small firm that is searching for financial relief to continue operations or looking for possible options on how to re-open your company during these unprecedented times, there are several financial sources intended to help you with a business loan. There are hundreds of government grants and fundings available for small businesses affected by coronavirus – saving you money, lowering the company’s costs and helping grow your business. You may choose between various options such as Bounce Back Loan System (BBLS), Coronavirus Job Retention Scheme (CJRS), Future Fund, Self-Employment Income Support Scheme (SEISS) and Coronavirus Business Interruption Loan Scheme (CBILS lenders), which can help to find suitable variant and access the necessary financing to stay afloat and cope with the crisis.