By David DeMoss
With many people out of work and a reduction in consumer spending, the global economy has taken a huge hit. Lots of businesses are worried about making it out of this economic crisis, especially the smaller mom-and-pop shops. While each business has a different financial situation, there are a few tips business owners can implement to help prevent them from closing their doors permanently.
The first step is, if possible, to check in with your customers to see how they’re doing and to discover what their current needs are. Since people are stuck inside and some are at an increased risk when going out to get groceries or supplies, many companies have shifted their services to provide for the new need. For example, some restaurants are now delivering the products from their suppliers directly to their consumers as a grocery delivery service, while other businesses have stopped their normal production to create hand sanitizer or face masks. There is no crystal ball that can foresee how long the current circumstances are likely to persist, so it’s recommended to develop a plan that decreases your expenses while seeking revenue opportunities and relief funds if necessary. This can mean cancelling any unneeded subscriptions, re-negotiating your rental lease, and cutting back on all unused or unneeded expenditures. It’s also wise to create a long-term plan in regards to budget, business operations, and cash reserves. While the current pandemic is something that no one wished had occurred, it’s shown how important it is to have a plan that provides for crisis and not just growth. Above all, stand by your values and be honest with consumers and employees during this time. This is a unique situation for all of us, and while no one is exactly sure how the future will pan out, we could all use a little kindness and authenticity towards one another. Read the full article by Desmond Lim below.
The global health crisis has caused immense disruption to the global economy, and many companies around the world have been severely affected. Even so, some businesses have shown inspiring innovation in these challenging times.
Over the past few weeks, American automaker Ford innovated and produced 2.4 million protective face shields for medical personnel, assembling the raw materials, manufacturing capabilities and people over one weekend. British tech company Dyson pivoted to create a ventilator product in 10 days, while French fashion and luxury retailer Louis Vuitton announced recently that it will convert its perfume production lines to start making hand sanitizer.
How can business owners learn from the quick thinking of these companies and emerge stronger? Here are five suggestions.
1. Talk to your customers and listen to them.
Whether you are a restaurant owner or an online ecommerce business, pick up the phone and call your customers one by one. Ask how they are doing, but more importantly, ask what are their needs at the moment.
If you are a restaurant owner, ask your customers how they are getting food today. Are they ordering online or cooking at home? More than ever, business owners need to stay close to their customers, to be attentive and build something that they need. The market has shifted, and it’s important for us to be open-minded and understand the rapidly changing needs of the customer.
2. Pursue opportunities to pivot.
Several restaurant chains in the United States that my company works with have pivoted to do delivery-only business, quickly creating contactless delivery options and online menus with easy-to-use website builders. Coupa Cafe, based out of Stanford University, has started an online grocery business, delivering food from their suppliers directly to consumers.
But innovation and pivoting is not exclusive to startups. In critical times like today, businesses have to pursue changes aggressively. More than ever, there is a strong need from customers to get the food, medical care and essential supplies they need.
They may not be able to walk out in the public to acquire them physically, but there are various methods to deliver the products and services in a contactless, innovative way.
3. Cut back on expenditure, and plan for the next 6-12 months.
The prudent mindset I have is that this crisis will last for more than a couple of months. As a business owner, I’m reducing my expenditure and saving up on cash reserves. There’s a few things you can do, including:
- Re-negotiate your current rental leases, online software subscriptions and supply chain orders.
- Reach out to your bank and set up a debt line or loan facility. You do not have to draw on it today, but it will be helpful in case the situation prolongs.
- Reduce any unnecessary cash expenditures and let your team know in advance.
It is better to start planning early and forecast that the situation will last till 2021, and this will help your business to be in a financially sound situation in the coming months.
4. Share your values and stay true to them.
During tough times like this, there is a need for leaders to step up and share their values. As the CEO of Visa promised to his team, there will be no layoffs this year. Similarly, the CEO of Zoom, Eric Yuan, has provided the company’s videoconferencing software for free to all schools in America.
This is the opportunity for all businesses, big or small, to focus on the values and mission they stand by. Jack Ma of Alibaba often talks about focusing on customers first, employees second and investors third and how he wants to empower his company to last more than 102 years by aligning his team on a mission that will empower them.
5. Have a 12-18 month plan for the future.
Unfortunately, this crisis will drag on for many months. Even in the best-case scenario, a vaccine is not expected to be ready for at least a year later.
Businesses need to have a strategy for the next 12-18 months, well into 2021. This is not the time for short-term thinking or to hope that things will get better in the near future.
By planning for the long-term, you should start to save your cash reserves, get a debt line from your bank and be transparent with your employees, investors and customers. You will need to come up with a strategy on how to emerge from the current situation stronger, by being open-minded and brave to innovate and pivot.
For the past 15 years, Tesla has been gaining market share from Ford by being at the forefront of innovation and design of electric cars.
In the course of a weekend in the midst of this crisis, however, even in the midst of plummeting car sales, Ford was able to pivot quickly to produce protective face shields. Ford threw rules, regimented decision-making and hierarchy out the window. Under the pressure of the current climate, Ford was able to pivot at a pace they haven’t been able to in the past decade.
In the same vein, businesses from a neighborhood cafe to a growing hotel chain can seize the opportunity to connect with customers and position themselves for a post-crisis environment.