The longer the COVID-19 pandemic stretches on, the more likely it is that businesses (and entire industries) will collapse from the pressure. But not all businesses will flop. Many are holding strong and will continue to remain resilient long after the crisis subsides. The question is, which ones?
5 Factors That Increase a Company’s Likelihood of Survival
We’re all sick and tired of healing words like “unprecedented,” but there’s no word in the English language that’s more appropriate for today’s circumstances. Even after more than six months of this pandemic, the circumstances and ramifications of this global issue are striking. Many small businesses have already been sunk by the immediate impact of the shutdowns. And as the crisis continues, we’re seeing much larger organizations face heightened risk.
As an investor or entrepreneur, it’s helpful to understand the driving forces behind these risks. In an effort to provide some clarity, here’s a look at different factors that impact a company’s likelihood of survival.
- Low Contact
Any business that’s considered a low-contact business is going to have a much higher chance of long-term survival than a business that requires face-to-face interaction with customers and clients.
The term “low contact” is a malleable one. (As we’ve seen in recent months, many businesses that weren’t previously thought to be on the low contact end of the spectrum have made some swift shifts to make it possible to continue operating without a lot of direct interaction.) But it typically refers to online businesses and/or brick and mortar businesses that can offer contactless shopping experiences (such as curbside pickup and self-service).
2. Ability to Pivot
The companies that have been most successful in this pandemic are the ones that have been able to pivot from offline to online. From the outside looking in, this might sound like a simple shift. But in reality, it requires a nuanced approach.
One of the biggest challenges lies in a company’s ability to effectively manage remote teams – something that’s not as easy as it initially appears. Any company can get by for a few weeks operating a remote team, but in order to survive over the long-term, there has to be some degree of purpose and intentionality.
Moving forward, businesses will have to shift their hiring practices to identify applicants who have experiences and skills that make them conducive to working in a remote capacity. While words like “disciplined” and “self-starter” have always been tossed around by businesses, they’re taking on new meaning in a COVID (and post-COVID) business world. The companies that find these candidates will set themselves up for long-term success.
3. Staple Goods
During tough economic times, businesses that sell staple goods are always going to outperform companies that operate in segments that are supported by discretionary spending. This means supermarkets, healthcare companies, and even retail clothing are more likely to survive than organizations that are predicated on entertainment or luxury.
4. Existing Trust
Trust is big right now. For consumers, it’s not just a matter of working with companies they trust in order to make a smart purchase decision. It can be a matter of life and death.
Companies have to convince their customers that they’re acting responsibly to reduce the risk of transmitting the virus. The businesses that actively focus on building trust during this time will discover that the marketplace rewards them in direct proportion to their investments.
5. Organizational Transparency
In addition to having a high degree of trust with customers, businesses that prioritize transparency within the organization will face higher chances for success.
“Instead of focusing on mass emails or communications, encourage managers to reach out to teams directly,” Limeade suggests. “Keeping those direct relationships intact and conveying the exact reasons and numbers behind the decision and what the future may look like for the particular employee or company can go far. The pandemic will come to an end and the trust your employees have in your organization is still important when that time comes.”
Adding it All Up If a business can survive this crisis – which was sudden and overwhelming on all fronts – it stands to reason that the business should be able to weather almost any storm. For investors and entrepreneurs alike, it’s important to realize that we’re embarking into a new world with new rules. The more you pay attention to the underlying factors that are driving and/or suppressing results, the stronger your prospects will be.