Change is the only way to survive. The coronavirus crisis is taking no prisoners as it decimates large swathes of the economy.
Despite unprecedented business support measures, a wave of bankruptcies is about to break – just as lockdown is beginning to ease.
Sadly, some small businesses and start-ups, the powerhouse of growth and innovation, are especially vulnerable.
So how do you protect your business at this terrible time and keep going long enough to make it through?
The answer is to change the way you control your costs, generate your revenues, and invest your time.
Change to Better Control Your Costs
Cash is the life blood of every small business. Don’t allow yourself to bleed to death. Act now to conserve and generate cash.
1. Cut expenditure to the bare minimum
Ruthlessly review all business expenses. Avoid spending money unless absolutely essential. Postpone discretionary investments. Incur only those costs needed to keep the business running or generate cash in the near future.
2. Negotiate better terms with customers, suppliers, and the banks
At the point that lockdown was imposed, a British Chambers of Commerce survey revealed that 62% of companies had three months’ cash in reserve or less.
If you are in this position, you should approach your customers and ask them to pay more quickly than usual. Use the goodwill you may have created with large clients, particularly those resilient to the impacts of coronavirus.
Does cash have a higher value to you now compared to the profit you originally calculated at the time of raising the invoice? If so, you may even decide to offer customers discounts for early payment.
Conversely, request deferred payments from suppliers, postponement of rent, refinancing of loans, and temporary relief from interest payments on outstanding debts.
3. Take advantage of Government support and commercial loans
Governments around the world have acted fast to provide temporary support to businesses to help them ride out the coronavirus storm.
In the UK alone it is expected that Government support through schemes such as furloughing, grants, loans, and tax deferral could cost as much as £300 billion according to the Centre for Policy Studies.
Do you need to take advantage of this assistance to keep your business afloat or to avoid having to make redundancies? If so, don’t hesitate to act.
Change to Generate New Revenues
As I pointed out in my recent article on business transformation in the post-COVID-19 world the winners will be those firms that adapt fast to the changes which are taking place.
1. Deliver your products and services virtually as well as physically
Social distancing and cost controls dictate that your business must find ways of delivering your products and services virtually as well as physically.
Are you a shop that does not have an online presence? Then now is the time to sell your merchandise on an e-commerce platform.
It is relatively easy to set up your own website. But even if you can’t do this right now for cost reasons, a temporary solution might be to start trading on eBay or Amazon.
Do you sell professional services? Then why not offer paid remote consultations via video link or sell materials as electronic downloads.
All necessary tools such as Zoom, YouTube, Google Drive, etc are of course easily accessible for you and your clients and are free to use.
If you wait for your face to face opportunities to come back, you could be waiting for a long time as most experts think a coronavirus vaccine is unlikely to become available for at least another year.
2. Understand and anticipate changes in your customers’ behaviour
Commentators are already pondering not just changes which have already happened – the so-called “new normal” – but also what might change next – i.e. the “next normal”.
As a result, you must consider whether the business model that has served you so well in the past has a future in this new operating environment.
Even if your core offerings survive relatively intact, you may still need to change your approach to marketing to capture attention or your pricing strategy to maintain sales.
Ask yourself specifically how you expect your existing customers to behave moving forward. Whether their preferences will have changed and whether you need to adapt to remain relevant.
3. Study your competition carefully
Perhaps, your competitors are faring better than you?
They may have higher resilience through diversification, a lower cost base or less exposure to the hardest hit sectors of the economy.
Or they may have greater agility and already be shifting the way they operate to address new opportunities.
What are they doing well,? What can you learn from their successes? How quickly can you change to compete with them?
Equally, consider what different customer types they may be serving and how you will change your business to attract them.
Change to Manage Your Time More Efficiently
When change is urgent and time is of the essence, the way that you invest your time is vital. The number one priority is to deal with cost and revenue challenges to ensure the survival of your business.
With your company running at reduced capacity, you may however find yourself with more time to spend working on your business rather than in your business.
Use this time to catch up so that you get ahead.
1. Get those outstanding projects completed
During this window of reduced business activity, consider what projects can be completed that will be most beneficial once you get fully back up to speed.
Whatever you do, you should be looking to improve your efficiency, agility, and responsiveness to take full advantage of the first green shoots of economic recovery.
2. Upskill your team
Wherever possible, you should keep your staff engaged even if they are temporarily inactive due to the COVID-19 pandemic.
In the UK, the Government’s furlough scheme encourages training and upskilling. So, you should make the most of the free training from providers such as the Open University and Google on the skills toolkit website
Again, anything that you can do to ensure that your team acquires up to date information and skillsets will stand your business in good stead for when the upswing takes hold.
3. Invest in your own personal development
Finally, use this opportunity to read, take courses, and learn as much as you can.
Right now, experts are sharing their personal experience and expertise on numerous free webinars run by trade organisations and networking groups. Register and, even if you can’t join live, you can always catch up with the video recordings.
By doing this, you’ll not only gain fresh insights on the future direction of your business, but you’ll also take your mind off the stress and anxiety of coping with today’s challenges.
Sadly, the current economic crisis is sounding the death knell for many small businesses.
However, it is survivable by adapting swiftly to the change that it has imposed.
“It is not the most intellectual or the strongest that survives but the one that is best able to adapt and adjust to the changing environment”Leon Megginson – Professor at Louisiana State University
Finally, it is worth keeping in mind that in time things will get better.
By changing now – no matter how painful this change might be – your business will not only survive but emerge in better shape to take advantage of future opportunities.