Small businesses are usually in excess of 95% of the number of all firms in a country and recruit more than 85% of most countries’ labour force. Small businesses are at the forefront of innovation and adapting to changes in the modern society. Small businesses are also hardest hit by natural or manmade disasters and crisis.
The COVID-19 will continue to take many lives until a formidable cure is found. The corresponding lockdown to reduce the spread is also bringing to an end the lives of many businesses, large and small, and seriously hurting many others.
Here are some of my thoughts as to what small businesses can do during this crisis to survive and become better.
1. Do not panic! Whenever this is told to you in a crisis it means it is serious. However, this is highly recommended at this time because panic induced decision making may damage or kill your business even if you have a good chance of survival.
Crisis requires a steady hand and a calm mind. In crisis you will have to firefight and think strategically at the same time. You will have to manage situations as they arise. You will have to think short and long term simultaneously. Now is not the time to slack off. Now is the time to summon every aspect of your creative genius to innovate and make decisions about matters pertinent to your business survival.
2. Transition to a cash flow management system. During times of crisis, cash is the oxygen that businesses will need for their survival. Focus on receipts and payments and sources of finance that can be drawn down when there are no income flows. Stay vigilant and constantly scan the environment for financing opportunities from Government interventions and grants, financial support from lending agencies etc. Now is not the time to raise finance for new capital investment and non-essentials if your business is not sufficiently resilient. All cash flows should be directed to essential costs and to matters which will require survival first and then on strategic interventions and projects for the betterment of the business.
3. Act ethically and professionally during the crisis. The goal of every business during this time is to survive and not to be profiteering or adopting unethical practices to shake down your hard earned and loyal customers and other stakeholders. Businesses which are unethically taking advantage of the situation will suffer damage to their reputation that may linger longer than the effects of the crisis. Reputational damage from unethical practices during a national and international crisis can develop into being a deadly threat that will eventually shut your business down.
4. Review performance goals and targets. The complete cost and revenue structures of a business need to be examined to determine where there is room to cut slack. Losses during a crisis may not be avoidable but can be minimized with good management effort. An understanding of the business’ break even position will be important to make decisions during a crisis period. Please note that cost cutting is not the only solution during a crisis. Sometimes, strategic investments need to be made to build the loyalty of your staff and customers. It is also important to spend time, if possible, on effective crisis communication with your customers.
5. Manage your customers and receivables by maintaining communication. To improve the cash flow position of the company, looking to collect on receivables will be farfetched. Recognize that, as many of your customers for whom you would have had credit sales will also be in a similar position as your business. You should, however, contact your customers and debtors to understand their difficulties, reassure them of your commitment to them, let them know you value their business, work out arrangements of mutual benefit and assess opportunities for future product and service development. Now, is a good time to be in communication with your customers, even if they do not owe you, as you may learn of new opportunities for meeting their needs. The crisis may reveal new opportunities and your customers will remember your support during the times of hardships.
6. Do not hide from people you owe. Make contact proactively with all your suppliers, creditors, bankers and financiers whom you owe before they contact you. Do not hide from them as the crisis has affected everyone. Explain your position to them truthfully. Renegotiate all outstanding sums and payment terms with creditors and loan agencies. In crisis, almost everyone would be willing to offer flexibility to previously contracted terms. Do not, however, take advantage of the situation to seek deferral of payments when you know you can pay and that the other business needs the money more than you do.
7. Reassess all capital expenditure and strategic projects in the pipeline. Carefully understand the cash flow implications of each project and their relevance after the crisis. The crisis may highlight the need to incur certain capital expenditure that was previously ignored, for example, computer systems and software to facilitate secure remote working and communication. You may also be able to cut better deals on machinery and equipment due to companies closing out or cancelling on orders due to financial difficulties. All projects must be properly assessed, and investment focused on those with the greatest long term financial and sustainability impact.
8. Examine your business model. The crisis also provides an opportunity for companies to examine their business models and determine how they can make changes to ensure adaptation during the crisis and in the post COVID-19 world. Now, is the time to ask the question: “do I continue to do what I am doing or is there a better way to achieve similar or improved results”? I urge entrepreneurs to introspect, really document all the problems and issues affecting them from operating safely during the lockdown. As the problems are identified, work on solutions so that you can weather the storms in a future crisis. Entrepreneurs whose businesses may have died during the crisis can resurge. I encourage you, you did it once before, you can do it even better going forward. Keep on the lookout for new and better opportunities.
9. Learn from the crisis and improve your Business Continuity Planning. Let this crisis be a lesson on business continuity planning. This is not always on the agenda of small businesses. However, you always have to think how you can keep your business going under various stress scenarios, crisis and disasters. It is important that businesses continue to function, not because you need to make a profit, but because your customers are depending on you and you can’t let them down. You must always have “what if” sessions and develop plan B, C, D etc.
10. Don’t be ashamed of crisis induced failure. Business failure is one failure that you can be proud of. It is one of the failures in life that certainly prepares you for greater success in the future. If you are a business owner or professional who is severely impacted from the lockdown to the extent that there are no revenue or income and your personal survival has become paramount, then please note that it will not be you alone in this situation. Do not take it personally. The crisis is beyond our control and nothing you may have done personally might have contributed to business failure and loss of income. Reach out to your peers, contacts, and business partners to understand and share your experiences of how you are coping. Listen to their challenges as you can, also, be of help to them too. Ask them for help where necessary. You may not know of the possibilities that exist unless you ask. Prepare also to start back from a point much lower down the ladder than you were before the crisis hit. Good can come out of this crisis if you manage your mental health and stay focused.
I am sure that there are hundreds of other thoughts and ideas about what you can do during this crisis. I hope that the above inspires you to think positively and will ignite the many more thoughts that can contribute to you deciding whether your business can come out of this crisis better than you went in. If your business no longer exists after the crisis, let us keep looking for the new opportunities.
