The worst is hopefully behind us as entrepreneurs and small business owners start to focus their energies on recovering from the impact of the COVID-19 restrictions.
Arguably, this is not going to be easy. Many smaller businesses are facing a cash crunch as the economy opens up again; they have limited options when it comes to securing financial support. In addition, they now face a world where their customers may have less money to spend due to soaring unemployment.
If you’re running a small business, there are no quick fixes for the blow the pandemic may have dealt to your cash reserves and cash flow. Also, there is no way to predict how soon the crisis will completely be over nor how it is likely to change your industry or the behaviour of your customers.
However, here are four steps you can take to put your business on a more sustainable footing for the future – whatever it may hold.
1. Assess the damage
If business slowed down or you needed to close shop during the stricter movement restrictions, you are probably throwing yourself back into work in the hope of making up for lost time and money. However, it is also important to take some time out to evaluate the damage the crisis has had on your business. For example, here are a few things you need to take stock of:
How did the crisis affect your supply chain? Can you still source the same goods and services from providers you used before the restrictions?
What impact has the pandemic had on demand for your offerings?
Have you needed to downscale your workforce, and what will this mean for your future growth?
What will your cash flow look like as expenses resume as you restart operations?
What’s your situation vis-à-vis liquidity (credit and cash)?
How quickly can you reactivate your sales and marketing strategy?
Has your cost base increased? Did this affect profitability?
Only when you understand how your business was impacted during the pandemic can you start to plan meaningfully for its recovery. If you were one of the few to benefit – for example, an e-commerce or food delivery business – you might want to evaluate how you can sustain the momentum achieved beyond the pandemic.
2. Reflect on your pandemic experience
Once you’ve looked at the metrics highlighted above, the next step is to ask what they mean and what you can learn from them. A good option is to examine what worked well for your business and what did not. In addition, there is now an opportunity to evaluate how your business copes with adversity and identify any gaps in its resiliency.
The pandemic may also have revealed a great deal about the readiness of your business to integrate today’s digital technologies to ensure greater competitive advantage. For more insight, you can benchmark yourself against competitors and business partners to see how you fare. A non-exhaustive list of the questions that may be worth asking includes:
In a crisis, could you pivot the business priorities as quickly as you wanted to? What would you do differently next time?
How did your team respond, and what gaps did the pandemic reveal in their capabilities?
If you transitioned to offer home delivery or virtual services, was this new method profitable for you? Is this a sustainable option during business as usual? Did this experience show that your business is ready for a digital world?
Was a shift to remote working successful, and should it become permanent?
Were you using technology and automation effectively?
Were your suppliers and service providers reliable in these difficult times? How will you better avoid supply chain problems in a possible future crisis?
Did you have the financial agility and business insights you needed to respond rapidly to the situation as it unfolded?
How does your performance compare to your peers in the industry?
3. Assess what has changed from your customer’s perspective
Whether you operate in a B2B or B2C landscape, you can be sure COVID-19 has transformed the traditional attitudes, habits and beliefs of several of your customers. For example, restaurants may find that customers still prefer takeaway and deliveries to eating out. Likewise, people are showing an interest in self-drive holidays to avoid catching flights.
In this volatile climate, businesses need to be more customer-centric than ever to thrive, especially with many business customers and end users curbing their spending. Ensure you have a finger on the pulse of your customers to understand how their needs have changed and to anticipate what’s next. Some questions to consider:
Who are your customers today? Which customers did you retain, gain or lose?
Have you been meeting their expectations throughout the pandemic restrictions? Could you have managed expectations better?
How have these expectations changed due to, for example, a greater reliance on digital channels or loss of income?
How did their behaviour and consumption patterns change? Do you (and they) anticipate a return to earlier patterns of behaviour?
How does your digital customer experience measure up?
4. Review your strategy and operations
Looking at the areas highlighted above will help you identify the strengths and challenges of your business, and evaluate whether your current business plan is suitable for the newly digitalised world of work. You might want to fine-tune your business strategy and identify opportunities to streamline operations.
Finally, it would be wise to plan for multiple scenarios since the progression from the COVID-19 crisis to recovery may not be linear. We could, for example, face a second and even a third wave of infection. It could take longer than anticipated for consumer spending to normalise. Planning for a range of outcomes will ensure you’re better prepared for the next crisis, whatever it is or whenever it strikes.
Each of us should be supporting our favourite small local businesses to help them recover during this time. The small businesses that get through this crisis will have a central role to play in restarting economic growth and driving job creation in the years to come. The more small businesses succeed, the greater the chance of survival for all businesses.
By Viresh Harduth, Vice President, Small Business, Sage Africa & Middle East