The novel Coronavirus has and continues to hurt businesses in many ways. Governments in developed economies have been at the forefront of developing fiscal measures to cushion businesses during these tough times.
In developing countries, however, most governments run on fiscal deficits and taking drastic measures to protect businesses may not be an option for them. Below are some steps that can help businesses soften the blow during these hard economic times:
1. Protecting their Cash Flow
Cash flow is the life of any business. It allows firms to cater to their short term obligations without having to disrupt core functions. Although policies such as employees working from home may save businesses some expenses in terms of utility payments, flat rate expenses such as office rent still need to be paid regardless of any decline in revenues.
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To increase cash flow, businesses can encourage prompt payment by customers by sending overdue notices or offering slight discounts for those who clear their payments promptly. They can also negotiate with suppliers for extended credit terms, allowing them to keep the money in their cash flow pipeline longer.
In the event that expenses exceed the expected revenues, businesses can negotiate with banks to give concessionary loans at low rates as well as provide moratoriums on loans that are already due. Any capital spending plans that were underway must be put on hold where possible to conserve cash in the short run.
2. Switch to Online Sales Strategy
During a pandemic such as t
he COVID-19, person-to-person and brick-and-mortar retail is often severely restricted, with most employers allowing staff to work remotely in a bid to stop the spread of the virus.
Working from home may, however, prove difficult for businesses in the service industry as most employees need to be physically present to offer their services. Even so, businesses can take the pandemic as an opportunity to develop their online sales strategy.
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For employees involved in sales and customer service, companies may ensure continuity by creating online platforms where customers can get virtual assistance without violating the rules of social distancing. During this period, businesses should take the opportunity to improve their online presence for marketing and offering great customer care services.
3. Having a Business Continuity Plan (BCP)
Businesses often collapse during an epidemic because they do not have a long-term plan. While a short term survival strategy is necessary, it is equally important to lay the groundwork for continuity after the pandemic.
A Business Continuity Plan (BCP) outlines the necessary steps to be taken in case of a crisis. With the Coronavirus affecting firms either directly or indirectly, BCPs will come in handy in ensuring that they withstand the tough economic times. Businesses need to outline all the risks they may face and how these will affect their operations.
Corona virus has disrupted global supply chains leading to loss of revenue, and consequentially reduced profitability. During a pandemic, businesses should also clean up any system errors that have been experienced to ensure that once the crisis is over, the they can bounce back and continue to offer clients exceptional services.
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4. Develop a Hands-on Approach to the Business
During a pandemic, the executive members of any business or company need to constantly maintain touch with the operational model. It is of great importance to keep an eye on the performance of the different services offered to focus any marketing strategy on the ones generating the most revenue.
The management should also develop a succession plan incase an essential employee falls ill. They also need to ensure that employees remain all-rounded and can handle any function should a colleague need time off to recover.
5. Communicate Transparently with Customers and Employees
In a crisis, it is hard to find clarity but businesses must communicate openly to both employees and customers. A good way to give employees clarity is to be frank about the situation and explain what new strategies have been put in place to ensure continuity of services during the crisis.
Employers could also source for ideas from their employees on how best to position the business to ensure continuity and prosperity. Besides that, employers should communicate the business plan openly to customers to avoid panic.
Maintaining such open communication lines with employees and customers will prove to be an asset to any business since it encourages loyalty and retention.
There are many crucial lessons to be learnt from the Coronavirus pandemic and its impact on businesses.
The five strategies outlined above can be useful to firms that had not prepared for an economic crisis since they are easily implementable.
Advance preparation is often the most ideal way of protecting businesses through tough economic times and where possible, business owners are encouraged to set aside emergency funds that can be used to cushion their companies.
The writer, Maryanne Ng’ang’a, is an investments analyst at Cytonn Investments.