COVID-19: Six ways to reshape your business
It would be an understatement to say the world has changed due to the COVID-19 pandemic. But as often is the case, it is through adversity we see a person’s real character shine, and the same holds true for business owners. So as a business owner, how can you reshape your business and emerge from the pandemic ready for the next few inevitably difficult years?
Make firm decisions
We have all heard the saying ‘You’re like a rabbit in the headlights.’ In these circumstances, you can’t be! Make swift, hard decisions now. Do not wait until your sales drop, and then a little longer before looking at overheads and how to reduce them. Do not wait to look at diversification. Do not wait to look for different sales channels. Act now. Choose your path, stick to it, and do not look back.
The pandemic is providing a crash course in exponential change. The nature of complex interdependent systems means that planning uncertainty quickly multiplies. For this reason, companies urgently need to improve their agility — their ability to learn quickly and to change course quickly. And they need to realise that disruption can come in waves; we should be wary of just focusing on the next wave of any disruption (such as a pandemic) when a subsequent wave could be even larger.
Pivoting is the business buzzword of 2020. Take 13 CABS as an example – they quickly foresaw that closed borders and businesses would impact their patronage and duly pivoted to establish a parcel delivery service.
Adopt digital technologies, remote working and e-commerce
My wife is a General Practitioner, and her clinic could not continue operating as normal. Patients now get screened at the door, COVID-19 testing procedures have been set up, and barriers have been put up to protect the administration staff and other patients. The managing partner was even making hand sanitiser at home for the clinic to use.
Now the clinic is split into two shifts, with doctors working from home half the week using phone and video technologies to conduct patient appointments, and the administration staff using ecommerce to access HiCaps, process payments and process online bookings and reminders.
A generality is that before COVID-19, businesses were poor planners – particularly the small- and medium-sized ones. A plan was often only put in place because ‘the bank needs it’. The pandemic has starkly illustrated the weakness in business planning in all its forms be it supply chain management, cash flow and liquidity management, financial and capital planning, or planning for growth.
I would advise that you must plan post-pandemic immediately. In fact, you should be well underway by now because waiting until after COVID-19 will see many businesses fail. Remember buying your first car or house? You had to have a plan in place and if you didn’t, you probably wouldn’t have got either. Plan for after COVID-19 right now. While you may not be able to work in your business, this is a perfect time to work on your business.
Keep a steady cashflow
By far the most important forecast you could do for your business is a cashflow forecast. Without a positive cashflow, a business will die. Do a cash flow forecast now for the next six months and you will quickly determine actions you must take today. This might include stabilising sales through diversification, reducing overheads now (not after the sales reduce further), extending supplier payment terms, or decreasing debtor days. It may also mean you need to explore different financing options now.
Unfortunately, medium-sized businesses are the ones most likely to come out of the pandemic worse off. They do not have the ability of large businesses to raise funding and increase pressure on working capital. They are not as agile as small businesses. While sole traders can stop paying themselves so they can pay and retain staff, medium-sized businesses are less able to do the same. That’s why managing cashflow will probably be the most important task in your business now.
The Australian government has a recommended code of conduct for commercial rental agreements. It is not enacted into legislation, but a set of principles recommended by the government. Underlying these recommendations is the idea that ‘we’re all in this together’ and that we ‘all have a part to play and a burden to bear’. A landlord can still not reduce rent for a struggling tenant or defer their rent. I hear their objections too – “we are a business, and we require the rental payments to pay our debts.”
However, I look at the bigger picture on a range of levels. First, in this environment it will be hard replacing a tenant at full “normal” market rates immediately, so it would be better having some rent coming in rather than none. Second, showing empathy and helping your tenant will probably develop greater loyalty and they are likely to stay longer beyond COVID-19. Third – and most importantly for me – it reflects your character, your reputation and your brand. I learned many years ago that everyone has a story. In this time of immense tragedy, where many people are hurting, why create more hurt when you don’t need to? Be a little kinder. You will feel better today and your kindness will reward your business in future.