As the Coronavirus still rages on, entrepreneurs have long accepted the new reality – this virus is not only responsible for a huge health crisis affecting billions of people, it has also triggered a devastating downturn in the global economy.
The numbers are pretty depressing. According to the IMF’s April 2021 World Economic Outlook Report, the global economy contracted by 3.5 percent in 2020, a 7 percent decline from the October 2019 forecast of 3.4 percent growth.
Even if the situation looks beyond grim, entrepreneurs have to find a way to make things work. In a time when most people avoid risk, entrepreneurs must respond to change by shifting gears instead of looking like a deer caught in headlights. They need to look for opportunities instead of roadblocks.
But that’s easier said than done. How can one succeed or even survive as an entrepreneur when most people are getting laid off?
The key lies in remembering that every crisis has an endpoint. That’s the cue for entrepreneurs to take on something new.
They have to take this opportunity to innovate. Businesses can increase customer touchpoints by implementing more digitalization and disruption into their business models.
Drawing Comparison to the Past
COVID-19 may be unprecedented in its nature, but it’s not the first pandemic to wreak havoc among humans.
Infectious diseases have decimated human societies since ancient times. And the public response has largely been the same whenever one pops up – despair and chaos caused by traumatic shock.
The frantic atmosphere was largely due to a lack of knowledge about the diseases. People were scared and wanted the certainty of expert knowledge, which was scarce. One can hardly do business in an environment like that. You would be lucky to just come out of it unscathed.
However, things are very different this time. Humans have made significant advances in medicine, science, and technology since the last major pandemic. We knew very early how COVID-19 was transmitted from person to person, had quantified how contagious the disease actually was, and knew what the best practices would be to minimize deaths and infections.
Hence, entrepreneurs, this time know exactly what they can and cannot do. Their scope and capabilities might be limited, but entrepreneurs can still look for lucrative opportunities for themselves. The situation isn’t nearly as hopeless as it’s made out to be, especially when compared with previous pandemics.
If the pandemic has taught us anything, it’s that companies that do not digitally transform will fail.
You must have wondered why some companies are doing better than others in this crisis. The answer to this question can be found by closely examining these successful pandemic businesses: all of them have successfully adopted digital transformation and platform-based business models.
The business world has always been about survival of the fittest. In this day and age, companies that don’t adopt digitalization will sooner or later cease to exist.
For example, just take a look at the wholesale industry. The COVID-19 outbreak in 2020 massively restrained the wholesale market as trade restrictions and lockdowns across the globe disrupted supply chains and caused a decline in consumption. The overall impact would have been less devastating if these companies had started doing business on an online wholesale marketplace.
As the pandemic swept through the globe, most business operations came to a grinding halt. Many plans were delayed or overthrown, resulting in various business milestones being set aside.
So what should one do? Pack their bags and just leave? Well, not so fast. This is the perfect opportunity to spend more time on developing your operational plans and improving relationships with your peers, investors, and customers. It will help optimize your business plans and take care of all the chinks in the armor.
Look at what impact the pandemic will have on your business and industry in the coming few years. Determine whether your impact goals and ambitions are still valid. If not, you’ve now got time to make significant changes to your business timeline and strategies.
Managing Your Assets
This is a basic reminder, but a business needs at least three assets to become profitable and sustainable: money, expertise, and people.
As they used to say, “Shoot for the stars. If you miss, you’ll still be able to land on the moon”.
This is also true for the current situation. Aim to make a profit. If you miss, you’ll still be able to survive. In this way, you’ll manage to stay afloat and also prepare for the time when the crisis ends.
Here are three actions you should take when it comes to money:
Action 1: Self-reflect
You need to accept that your original business plan is out of date and then plan accordingly.
- What was your situation at the beginning of 2020? Was your business healthy or not, and why?
- Where do you see yourself in Q3 or Q4 of 2021?
- Approximately what amount of money do you have in cash today?
- How much money do you need to stay afloat for the next 18 months?
Action 2: Save Cash
Cash is king. It is time to reduce your cash burn rate by cutting non-essential expenses. Your business needs to become more agile by transforming fixed costs into variable costs.
Reduce marketing and events expenses; eliminate everything that isn’t completely necessary to the company’s daily operations.
Identify and manage your revenue sources. Examine your customers and identify which ones might be unable to pay their invoices. If possible, encourage your clients to pay faster.
Action 3: Get Access to Capital
Evaluate and calculate the potential risks. Also, verify with your investors, partners, banker, and trusted relationships whether they are willing to support you during this crisis period; and for how long.
Make sure you have the funds necessary to keep your company alive over the next 18 months. However, do keep in mind that video conferencing doesn’t seem to be a very effective method of fundraising at the moment. After all, establishing trust and confidence behind a computer screen is not easy.
Utilize this opportunity to strengthen your fundamentals.
During this period, your technical teams can dig deeper and continue improving your product. Also, take this opportunity to train them in new software.
The Executive Team
Use this opportunity to improve your product fit. How do you really bring value to your customers? CEOs and executives need to think strategically since right now, they are not slaves to short-term figures and quarterly turnover reports. Take a step back and consider adjusting your strategy and putting new processes in place.
The Sales and Marketing Teams
Communicate and innovate with your most valuable customers. Understand what makes them love your product as well as what might make them leave.
Do an in-depth analysis of your customer database. Identify missing product features: have you got the time to implement them and make your product or service tenfold better?
Your employees must continue to show their commitment if everyone wants to get out of this crisis relatively unscathed.
Here, communication is vital. You should communicate more with your employees and try to reduce uncertainty to keep their morale high. Be sure to look after them, protect them, and ensure their health and safety. It is imperative that you are honest and upfront with your team about what you know and don’t know.
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