The coronavirus outbreak in December 2019 came at a time when the global economy was trying to get its act together after being slowed down for a while by trade tensions especially between China and the US. The much-needed transition towards sustainable manufacturing and clean energy has also played a part in slowing down the global economy, but for a good reason. When the virus checked into town, all the gains we have experienced over the last decade were turned upside down. Businesses now have to address the health, social, and economic impacts of the coronavirus on top of the already existing societal (notably racism) and geopolitical (e.g. Brexit) issues that impact the business.
Supply chains all over the world have been disrupted by the pandemic, millions of working citizens infected, hundreds of thousands dead, and billions of potential customers rendered jobless. To compound these miseries, most markets are under lockdown, and no one knows for sure when life will get back to normal. The big question now remains: How will business people make their businesses more financially sustainable after COVID-19? Here are 5 measures you can take as a business leader to counter the financial impact of the coronavirus:
1. Leverage employment organizations when expanding internationally
If your intentions were to expand to international markets, or if you had already opened shop overseas, you can collaborate with professional employment organizations to source for and compensate employees. You can, for example, count on a Japan employer of record to help you to establish presence and support personnel in Japan cost-effectively and efficiently. They will help you hire new talents, manage existing staff, and navigate the legal requirements and obligations that come with business ownership in Japan. When you don’t have to worry about managing employee payrolls and compliance issues, or to hire a HR department for that matter, you are able to save on overhead costs until your business recovers fully from the coronavirus shock.
2. Re-evaluate your supply chains
The coronavirus has grossly exposed the vulnerabilities of global supply chains. Companies that depended entirely on Chinese manufacturers or raw materials have been forced to close down temporarily with some closing shop completely. Businesses that will survive this pandemic have to look beyond first- and second-tier suppliers, especially for their key products’ raw materials, and expand their supply lines to bring in more players. Businesses also have to expand their markets. Having a contingency “plan B” will not be enough. You will need to diversify in all aspects of your business so that if one line closes or is unable to recover fast from the pandemic, you will always have alternatives.
3. Reach out to customers
Do everything that you can to retain your main customers. If they owe you, don’t be quick to pressurize them to pay because they are also struggling to get back on their feet. You can loosen repayment terms a bit to accommodate the new normal- this is one of the small prices you may have to pay in order to keep your business afloat. Your lenders are probably doing the same for you. The most important thing here is to maintain open communication lines with your debtors, creditors, and other clients and being honest with one another in case of any payment difficulties. In the long run, when you are all back on your feet, you will still have your customers and cash will start flowing in as it used to.
Reaching out to customers also means reaching out to new markets, or offering more products to your existing market. If your existing market isn’t recovering as fast as other markets, it is okay to move your business elsewhere. If one of your competitors has closed shop, this is your chance to move in for their customers. Be courageous to fill in every gap that the virus could have created within your market, and to explore other options that could bring in additional cash provided they won’t compromise your brand identity.
4. Update your terms and conditions
There are some terms and conditions that you have held on for too long, some of which have left your business vulnerable during the ongoing pandemic. This is the time to scrap them all and create better terms that protect you from future crises. In fact, you would rather pull out of a contract now and pay the cancellation fee, rather than push on with it and incur losses in the end.
Going forward, you need to take a proactive approach in revenue, employee, clients, and commercial risks management. Crisis management is a process; not just an event. You will need all the teamwork and support that you can get if you are to pull this off. Flex your network and get rid of any dead weight.
Sarah Morris is a business advisor for several companies in the Arkansas region, and also provides Press Release Translation and PR consulting. She has experience working in a range of industries and providing technical support in topics such as business growth, market expansion, and product development.