If there’s one thing we’ve learned during the COVID-19 pandemic, it’s to expect the unexpected. An even better piece of advice might come with an additional clause – “expect and prepare for the unexpected.” In just a few short months, we’ve witnessed untold interruptions to life and business as we know it. Various business models suggest, however, the U.S. economy could recover as early as Q4 2020, depending on the efficacy of public health measures to eliminate or contain COVID-19. Four key recommendations will not only help you get back on the road to recovery, but also be ready should another crisis arise.
EVALUATE. Planning is more important than ever after surviving a business disruption. Even with an existing business continuity plan, now is the time to reassess where your organization, employees, customers and partners stand so that you can move forward with precision. This might involve answering some basic questions.
- Are our current employees emotionally prepared to resume work at pre-crisis levels or higher?
- Do we have enough staff to support business needs now and near-term?
- Is there now or will there be pent-up demand for our products and services?
- Can partners provide the support needed to quickly ramp up operations? If we don’t have partners, will we need them for the next leg of the journey?
- How will we adapt to lingering effects of this or subsequent crises?
- What types of business disruptions does our insurance cover?
DIGITIZE. The rapid global spread of COVID-19 led many organizations to suspend normal onsite operations and to implement “shelter-in-place” orders. As a result, these organizations had to find new means to conduct business, communicate with staff, and serve customers. Broadband access, e-commerce, remote work tools, video conferencing, and video streaming have proven indispensable in achieving these goals.
Forty-two percent of U.S. consumers responding to a recent survey said they are “not at all” comfortable returning to normal social activities as a result of COVID-19 fear. Streaming services jumped by 34% in March as a result of people staying home. Other businesses that offer online access – for ordering products and services, managing accounts, etc. – have been able to accommodate changing customer needs and continue operations as well. An online business model offers the “anytime, anywhere” convenience consumers have grown accustomed to.
Employees have widely embraced remote work during the COVID-19 contagion, with recent survey results revealing that 67% of personnel would support an employer’s indefinite work-from-home mandate. They don’t foresee any inability to accomplish business goals. Sixty percent believe they can efficiently do their jobs and 50% said they would be equally or more productive than at their normal work location.
Of course, every employee isn’t a good candidate for remote work. Responsibilities of some roles are best performed onsite. In addition, some employees simply prefer working in the office.
Technology continues to play a significant role in business evolution. Whether it’s remote work or an online delivery model, consider which tactics have been successful during the COVID-19 outbreak and which to continue in the “new normal.” Be sure you also apply fraud prevention tools to protect your networks, communications, e-commerce, banking and other systems.
INNOVATE. During the pandemic, we’ve seen transformations in response to need. For example, both large and small businesses mobilized to produce and distribute much-needed supplies to U.S. healthcare workers. Grocers stepped up curbside service, while restaurants focused on drive-through and delivery.
Is there something you’re doing differently as a result of the crisis? Continue to explore opportunities by asking:
- How has our customer base changed?
- Are there alternate revenue streams we can exploit?
- What enhancements or new products can we offer?
- Can we widen distribution to serve additional markets? Are there new delivery methods we can use?
- Would partnerships with other businesses help to expand our offerings or distribution network?
Most often, challenges present opportunities. Considering new approaches to doing business will not only help you bounce back, but also better prepare you for any bumps ahead.
OPTIMIZE. COVID-19 delivered a crushing blow to the global supply chain, with sobering implications for profitability. During this time, it’s not only important to focus on inventory, but to also shore up capital.
- Cut costs and expenses
When revenue is down, cutting expenses can help to preserve capital. From operating overhead to shipping, take a good hard look at fixed vs. variable costs to determine where cuts can be made. Identify line items that will make a significant impact, as well as low-hanging fruit.
- Prioritize and negotiate payables as needed
Depending on your business’s cash reserves, it might be necessary to reprioritize invoice payments. Call vendors to discuss whether interim arrangements can be made.
- Step up receivables
Calculate and timely collect what is owed you. Can you shorten payment terms or offer discounts for early payment? Bear in mind, you may be asked to extend the same considerations to your customers as you’re asking vendors to extend to you. But it’s important to know how much and when you will be paid. Contact customers to ask about their ability to pay. You should also ask your financial institution about tools that can help securely expedite receivables and manage payables.
- Identify viable funding options
Understand your liquidity and how much you’ll require to move forward, both short- and long-term. Call your lenders to reevaluate your credit risk and understand the financing options – lines of credit, low-interest loans, etc. – available to you. If taking a loan isn’t possible, consider investors or selling shares.
Access to the capital you need is crucial to the success of your business. A holistic approach, in which you efficiently manage inventory, accounts payable and receivables will ensure smoother cash flow.