In March 2020, the Covid-19 pandemic sent our economy into free fall. Now, just three months later we are starting to come out the other side and businesses are beginning to reopen once again.
For businesses, what started as a problem could be an opportunity—a valuable chance to reassess your strategy and operations to place yourself on the road to recovery.
To do this, businesses need to take decisive action focussing on areas such as their business model, cash flow, health and safety, forecasting, customer relationships, packaging/pricing/payments and business alignment.
Is your business model still relevant?
An essential first step is to take a look at your business and assess what has and has not changed due to the pandemic. Due to restrictions, many companies were forced to rethink their business models to survive. Many had to move to online sales and expand into new markets. Businesses need to review their current business models, their KPIs (Key Performance Indicators) and how they have changed in the aftermath of Covid-19. This will give you a good understanding of where you are now, what changes have worked, what hasn’t and what needs to happen next.
Determine how customer behaviour may have changed due to the pandemic. Which of your customer segments are still buying and still engaged? Once you know where the sales are currently coming from, focus your resources into this area. It can also help to talk to your customers and prospects, listen to their concerns and challenges and see if you can meet them.
Where does your cashflow stand right now?
Take the time to check in on your cash flow and where it stands right now. Use past data to run multiple scenarios, assuming:
1. Your sales don’t pick up again for the rest of the year.
2. This revenue shortfall persists into 2021.
3. The decline in revenue accelerates through the end of the year.
By examining these scenarios, you can plan and manage expectations of what is to come, to get your business through to the next stage. If you are a venture-backed company, talk to your investors about raising additional funds, or investigate venture debt to keep you going in the current climate.
How has the pandemic impacted your health, safety and legal requirements?
The way your business operates will undergo some change as a result of the pandemic. For some businesses, changes are required to maintain social distancing. For others, it may require significant re-organisation and change to the way they do business. All businesses must be aware of all health, safety and legal issues that could arise with the return to work in terms of customers, employees and suppliers. You will need to introduce a Covid-19 safety management plan which may include changes to the working environment, the addition of sanitation products as implementing signage to reinforce the requirements for employees to return to work safely.
Technology can be a tremendous asset during this period, allowing the introduction of a contact tracing application and other such health and safety measures. Consider all scenarios and play them out. What will you do if an employee contracts Covid-19? How will you communicate with the rest of the office? It’s essential to make sure you stay up to date with changing government guidelines at all times.
Take a fresh look at your forecasts
Forecasting is hard enough, let alone during such uncertain times. Your business needs to take a fresh look at its forecast for sales, expenses and cash flow and update your assumptions based on figures from the past few months. Model the cash flow, burn rate and liquidity under multiple scenarios: if the revenue declines 20% for the rest of the year; or 30%; or 50%.
All payments and costs within the business need to be reassessed. This includes taking a look at bonuses, commission rates and salaries. Think about your supply chains and whether they have been impacted and what this means for future sales. Your forecasting needs to delve further into other risks to your business, such as new interruptions, employees getting sick and health outbreaks.
Customer relationships are critical at this point
While this may seem difficult in the current climate, customer relationships need to be a priority. Whether you are selling a product or a service, you need to maintain and build on existing customer relationships.
This doesn’t always mean trying to sell more to your current customer base. It’s about being empathetic to the current needs of your customer base and reaching out to those who may be doing it tough. Customer relationships are built on the principles of know, like and trust. By reaching out during a time of need, and offering your help and support, you can build strong customer loyalty and ensure those customers will come back. Actions like this will be key to the growth of your business as things open up.
How can you re-package your product or service to improve your offering?
Now is the time to take a fresh look at your product or service and to reassess your offer.
Think for the long term about how you can continue to add value for your customers without losing them. Here are some things to think about:
- Can you offer a bundling package for your products and services? This increases loyalty while still protecting your margins.
- Can you offer a discount? This can draw demand and even bring in new customers currently on the fence.
- Do you offer payment term flexibility? Allowing people to pay online or make use of services such as Afterpay can benefit your business.
Get everyone focused on the task at hand
Once you have gone through your business and seen where you currently stand and what actions you plan to take for the future, it is a chance to get your business aligned and focused. Adopt an open communication policy in the workplace with employees, partners and customers. Customer experience and gratification are important for your success, especially in these challenging times. In fact, with Covid-19, the customer is the only thing that matters.
Remember, everyone is feeling unsure in these times. From your employees through to suppliers, the whole world has been affected by this pandemic. By being open and honest, you are letting people know what they can expect and share a clear vision moving forward. This is both motivating and reassuring, giving your business the best step forward.