How big boys survived: Adapting your business for survival
By Peter Theuri | April 21st 2021
The law of natural selection is such that in the struggle for existence, only the fittest in the ecosystem survive. And in the business environment, especially in a time crippled by a pandemic, competition to survive becomes intense. In 2020, only those that adjusted survived.
A year later, we are still in the clutches of the pandemic and again, only the most adaptable businesses will survive. But how did established brands do it?
1. They adopted the ‘customer ahead of profits’ strategy
The primary goal of the businesses was to survive; not to make a killing. In these cases, these businesses took a revenue hit. For example; many financial institutions restructured loan repayments and mobile service providers slashed charges on mobile transactions. “Everybody now says I’m fighting Covid-19 more than running the bank. But I know Kenyans will never forget what I did when they needed me the most to lead a fight we are ill-equipped for,” said James Mwangi, Equity Bank’s Chief Executive, defending some of the bank’s business decisions that put the customer first.
What this does is make the customers feel valued, and that in turn builds brand loyalty. Loyalty from your customers is what you need to survive hard times because even in a bad economy, you will be who they think of first when they need the kind of goods or service you offer.
2. Mergers and acquisitions
Some businesses realised that the only way they were going to stay alive was through mergers or acquisitions. One good example was the acquisition of Jamii Bora by the Cooperative bank in 2020.
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Other such strategic mergers and acquisitions that happened recently, albeit just before the pandemic include the acquisition of National Bank of Kenya Limited by KCB Bank PLC and the merging of NIC Group PLC and Commercial Bank of Africa Limited. There was also the acquisition of Quick Mart and Tumaini Self Service Supermarkets by Sokoni Retail Kenya to form a single retail operation.
A good business owner knows when it is time to join forces. Small businesses can go down the same road. They can merge, or allow for acquisitions, if only to prevent them from collapsing.
Sometime last year, it became necessary for offices to decongest and for many employees to work from home. And with this, digitisation came to the fore. Companies had to make sure that their digital systems were functional. Both customers and employees were going to need that.
Stanchart Chief Executive Kariuki Ngari told The Standard that the company spent in excess of Sh100 million to ensure that their digital systems were up to date and that the systems’ security was strengthened, due to the delicate and sensitive data they deal in. Thus with staff working from various locations, no data was going to get lost or compromised.
Similarly, smaller businesses could adapt digitised systems that ensure employees can work from home with efficiency and deliver without hitches like crashing systems or unnecessary delays.
4. Cost cutting
Overspending is one of the main causes of business failure. Companies needed to cut costs as much as they could so that they could turn a profit or simply remain afloat during the pandemic. They needed to do away with underutilised resources.
As they went digital and allowed for people to work from home, a number of companies did away with office space including furniture that was no longer in use.
The reduced office use also reduced power cost. Other companies made use of lower-cost alternative sources of power. Solar energy use became increasingly popular due to the fact that is cheaper and efficient.
Other companies slashed the labour force and replaced it with machines. Salary cuts were also effected to keep spending under control.
5. Risk management
As much as entrepreneurship is about risk-taking, many businesses kept this to a minimum. A keen look at the business arena shows fewer product launches due to reduced earnings and consequently lower purchasing powers.
Kenya Airways, as did some other companies, was looking for financial assistance from the government. They wanted bailouts on the back of poor performance, largely blamed on the pandemic, if to stay afloat. They received the funding and are on course for another. The government also gave tax breaks to salaried Kenyans and small businesses.
In the coming months, many entrepreneurs will have to make decisions that will either make or break their businesses ranging from their dealings with employees, harnessing new sources of revenue and ensuring their current products or services resonate with their current customer base. At the worst, they will have to evaluate their entire business model and decide whether the enterprise is still viable. We look at how entrepreneurs can navigate through uncertain times.
1. Empower your employees
One of the things you can do is provide support for your employees to work from home. According to Harvard Business Review, workers who are separated from their workplaces, coworkers, and familiar daily routines should be provided with individualised support needed to help them accomplish work goals.
Mary Murigah, a human resource practitioner and business consultant, says it is important to also retrain your employees for new roles. “The lockdown means many clients will not be coming physically to business premises. Is it possible to train customer service managers as sales people? Using internal talents for such training will also save you money. You can provide tools such as the internet that will enable them to work from home,” she says.
But there is a rider: Lack of visibility may also result in poor productivity. Solution? “Have a system of logging in and out and quantifying what they have accomplished as if they were working in the office,’ advises Murigah.
2. Ensure money-flow is right
This is also the time to analyse both the cash flows and expected expenses as well as areas where cuts can be made without affecting the quality of the business. Business accounting firm PricewaterhouseCoopers advises businesses to understand the resources available, determine other sources of funding and Identify assets which could be used as security or sold for further liquidity.
According to American Express, the ideal business model is one where more money flows into a business than out of the business. It says: “Positive cash flow adds value to a business, lets them buy new assets, negotiate deals with vendors and suppliers, hire top talent, spend on research and development, and plan for and invest in future growth.”
What then, if cash flows are suppressed? “One should not ignore the basics. Cut internet usage if it does not directly affect the business. Negotiate with employees if you feel there should be a pay cut. If such austerity measures don’t work, don’t be afraid to send people home to cut costs if you are still interested in business continuity,” says Murigah.
3. Establish innovative marketing
This is the time to get creative with the marketing strategies. Julian Kamau, a digital specialist, says that all businesses should ensure they have a digital presence, and “not just a presence but one that actively communicates with their audiences, engages with them and works on getting the services or products to the customers.” Kamau says this involves integrating social media and digital mobile marketing. With more people interacting online due to limits in personal interaction, Kamau says it is dangerous to rely on traditional marketing strategies because audiences have shifted with an increase in the consumption of marketing content on social media platforms and mobile phones which are easily accessible and user friendly.
“Traditional marketing does not allow for targeted marketing which is critical in modern marketing. This could be a challenge if you don’t clearly know who your audience is or the language to use as both the content and the product must resonate with audience needs. Know who you are speaking to and help solve their problems or meet their needs,” advises Kamau.
4. Time to change your product?
Ever heard of ‘opportunistic products?’ This is a term coined during the pandemic to indicate how businesses have transitioned from traditional products to non-planned products to support an emerging need. This requires that a business be agile and responsive to current needs. A business study done by Nigerian researchers Dr Andrews Akolaa and John Paul Kosiba shows that businesses should be ready to move away from current operations and produce products and services required in the Covid 19 world.
“New products should solve immediate needs of society, require firms to shift operational resources; financial, human and operational from their normal production lines into new industries. The product characteristics are unique and the motives differ from the normal firm products,” reads part of their report. As a businessperson, look at your current product or service and see if it still resonates with your customers and whether as discussed earlier, is still contributing to the bottom line.
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