Keep calm and carry on. This is what we are often told to do when adversity hits and people try to keep their heads when all others around them are losing theirs.
This may have rung true when the banking crisis hit in 2008 as that enemy was hiding in plain sight, meaning it could be dealt with reasonably effectively so that businesses and economies could suitably recover and carry on as usual.
I wasn’t expecting that
Enter COVID-19. A hidden force that has sent economies around the world into a tailspin. It is a situation which as you will have heard on the news, ad infinitum, will cause large swathes of businesses to go to the proverbial wall.
Experts maintain that top of that list will be small to medium sized businesses, as quite simply they don’t have the capital to stay afloat when there is little to no revenue coming in through the front door. In contrast others are saying that the pandemic need not be a death sentence for SMEs.
Brace, brace, brace!
To brace for the effects of COVID-19 and stand the test of time, SMEs will need to act decisively and prepare to take advantage of the recovery. After all, they can and should be able to change tack at the drop of a hat, whilst enterprise ships generally turn like the QE2.
Deloitte maintains that there are three phases that all resilient small business owners must face to recover from the COVID-19 crisis:
Since about May, SMEs have been in respond mode, but now experts maintain that the time is right for them to turn their attention toward recovery, ensuring that their businesses are ready to thrive in the ‘new normal’ marketplace. Of course, for recovery to take place, businesses must look outwardly rather than just inwardly. They still need to put the customer first and understand their needs and how their expectations have changed.
Reflect, Restart and Revitalise
Deloitte goes on to say that business strategies in the recovery phase will be best orchestrated through three critical actions: reflect (where does the SME stand today?), restart (what can the SME do to kick start the business?), and revitalise (how can the SME start to reshape its future?). These actions can help smaller businesses to bridge the crisis response to a successful future, by laying the foundation to thrive in the aftermath of the crisis.
SMES can really benefit from reflecting, restarting, and revitalising, but to be truly successful in their endeavours, they must be cognisant of the following.
- Understanding customers’ needs – How have expectations changed, and how should they communicate?
- Getting cash flow in order – Understanding the current health of the business to prepare for the ‘new normal’.
- Re-organising supply chains – How to evaluate the supply landscape, understand how it has changed and forecast future needs.
- Rethinking the workforce – How do impacts from the crisis impact on the capacity, capability, and affordability of an SMEs workforce?
- Digitally enabling the business – How the business can make use of digital tools and assets to increase its growth.
- What has changed in the workplace? – How does COVID impact the approach to managing physical and virtual workplaces, and addressing risk and compliance?
Of course, SMEs want to do all of this and they want to do it yesterday, but research has said that they should be mindful of biting off more than they can chew. These businesses should rather develop an achievable timeline for rebuilding so that they can prioritise what is the most important action first. Most people’s immediate goal will likely be to secure funding to aid the business recovery. That said and done, a next step would probably be to un-furlough staff, then restock the inventory before establishing a realistic date to reopen the doors.
Plan for another rainy day
When it doesn’t rain it pours and you never know what’s around the corner. That is why it’s always beneficial to have a contingency plan for when the next disaster strikes. After all, if you fail to plan, you plan to fail.
Without being the harbinger of doom, what would happen to SMEs and in fact most businesses if there was another disaster the likes of COVID-19? Would it really be the final nail in the coffin? Food for thought is that an estimated 1.7 million potentially harmful viruses circulate in mammal and bird populations that have not yet passed over to humans.
On that score, in 2015, Bill Gates gave his TED talk of how as a planet we were absolutely ready to deal with a global war, but not in the slightest bit ready to deal with a global pandemic. Did anyone bother to listen? That’s a massively rhetorical question if ever there was one. Fast forward five years and we are all realising that in 2020 he is bang on the money and everyone is now left picking up the pieces.
Adapt or die
The stark reality is that an emergency can come along to disrupt your small business at any given time. Using what you’ve learned during the current pandemic to prepare for the next crisis can help you insulate your business from future disasters. The most obvious being to build up liquid cash savings, if possible.
Forbes intimates that the pandemic may also have taught us a thing or two about how important it is to be able to adapt and keep a business fluid so it can reasonably weather storms. For example, if employees didn’t have the option to work remotely before, SMEs may want to incorporate that in their business model going forward.
Thinking outside of the box, although a possibly overused marketing term, never rang truer. Having a Plan B, C, or even D can help improve your business’s odds of surviving – and eventually thriving again – during tough financial times.
The sun will come out tomorrow
In closing, and to expand on the previous points, Forbes denotes that the six things small businesses can do to restore themselves to relatively good health post COVID-19 is to:
1. Asses the financial damage by comparing profit and loss or cash flow statements with last years but also look beyond the numbers.
For example, if employees have been laid off, SMEs must account for that in the rebuilding plan. Customers lost due to the businesses failing or because they have migrated toward competitors, will also need to be accounted for. And for bricks and mortar businesses, taking stock of existing inventory and how that stacks up with demands in the market is another factor to be considered.
2. Take a second look at the business plan and determine how the business can pivot to adjust to the new normal.
Developing a dynamic business plan and subsequent model and implementing strategic actions right away is helping those SMEs who are adopting this approach to minimise the impacts of the crisis and set their businesses on course for success over the short, medium, and long term.
3. Consider if the business will need funding to recover and start compiling a list of institutions that could help.
At the best of times, it is difficult for SMEs to get loans to grow their businesses. Those SMEs that are succeeding in staying afloat now whilst waiting for government assistance to kick in are keeping their heads above water by looking at one or a few of the following. Small business term loans from banks, credit unions and online lenders, contemporary financing options – accounts receivable financing; inventory financing; purchase order financing; equipment financing, and merchant cash advances.
4. Revamp the budget to account for new spending as, counterintuitively, you may have to spend money to make money.
SMEs should have a clear idea of what they need to be budgeting for right now despite the crisis and what they can cut to make the most of the revenue they do have coming in. The goal is to eliminate the monetary waste and get the operating budget as lean as possible so that when the chance to invest in growth comes up, smart SMEs can take advantage of it.
5. Develop a timeline for rebuilding that prioritises the most important actions first.
If SMEs want to navigate these choppy waters successfully, it’s best they start with the most pressing things first and then progress. For most, the immediate goal will be securing funding for the business. Once achieved, SMEs can then set a timeline for rehiring employees, restocking inventory and, finally, reopening doors if the business had to close because of the pandemic.
6. Create a contingency plan for the next crisis.
Using what you’ve learned during the current pandemic to prepare for the next crisis can help insulate SMEs from future shocks. To continue to succeed in the face of adversity, successful businesses will want to build up liquid cash savings, find ways to trim debt and nonessential spending to keep budgets in check. Many are finding that their biggest overhead lay in office rental that can now be kicked into touch with remote working becoming the new norm.
Uncertainty, change, and customisation are key elements of the new business reality in 2020 and seemingly well beyond. Embracing them, while difficult, will yield success. Businesses that excel will be the ones that effectively learn to engage the hearts and minds of their employees and customers.
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