It is too early to confidently predict the affect of the economic downturn facing us due to the deadly Corona / Covid-19 virus. But a downturn is unavoidable. The global economy was already shaky in 2019. Indian GDP was also at the lowest in the last five years due to demonetization and GST implementation. Now we are facing a deadly virus and deliberately shutting down the world’s major economies for at least several months. Factories are closing, shops, gyms, bars, schools, colleges, and restaurants shuttering.
Being a leader in stormy times can be stressful. It may turn out that you’re overreacted if you act too fast and the business might go under if you’re slow to act. Ability to keep you cool in a critical situation is a must have feature for a entrepreneur.
Here we’re giving some tips and guides to lead your business through the corona crisis.
A drop in revenue can impact overall financial situation of a company. The challenge we are facing is the lack of clarity about how wide the outbreak will spread and how long it will last, which means that you have to make short, medium and long-term contingency plans. You may need to rely on liquidity reserves, raise additional capital or reduce spending to make up for the shortfall.
You can also talk with your bank to arrange some emergency funding. State Bank of India (SBI) customers can take advantage of their recently announced COVID-19 Emergency Credit Line.
Look for opportunity
While the crisis is impacting all sectors, at a more granular level, demand increased in many specific areas. These include B2C e-commerce (especially door-to-door models), B2B e-commerce, remote meeting services, social media, hygiene products, health insurance, and other product groups. Enterprises can mobilize rapidly to address these new requirement.
For example, A major restaurant chain started offering of semi-finished dishes, capturing the increased need and occasion for home cooking during the crisis. And, Kuaishou, a social video platform promoted online education offerings to compensate for school and university closures. The company and other video platforms partnered with the Ministry of Education to open a national online cloud classroom to serve students.
In-person meetings are not always important
I'm not denying the fact that online meetings can never provide the same kind of value an in-person meeting provides. But businesses can leverage technology much more effectively to operate remotely and conduct business. We should realize that we need far fewer face-to-face meetings than we thought. Productivity benefits could be quite big than we think.
Shift your sales channel
Enterprises can look more carefully at budgets, making sure they squeeze every penny of profit out of their investments, and looking for the most cost-effective way to deliver products and services. Marketing budgets may appear to be a soft target for enterprises looking to make budget cuts. But a cut in marketing activity is a short term fix that is sure to have long term consequences. Maintaining visibility in market is essential for long term profitability and continued investment.
You need to keep in touch with your customers or you risk losing them. It's always cheaper to retain an existing customer than acquire a new one.
Enterprises should build their brand awareness and get more visibility, which means driving visitors to website and make sales. And one of the best times to get found by potential clients is when they’re searching for what you’re selling. You need to get found at every stage of the purchasing life-cycle, from exploring to evaluating specific offerings.
We recommend enterprises to cut 90% of their offline marketing budgets and put half of it into digital marketing campaigns.
Develop trust-based cultures with employees
PWC's 2016 Global CEO Survey revealed that 50% of CEOs worldwide consider lack of trust to be a major threat to their organizational growth.
Harvard researcher Paul J. Zak, discovered that "compared with people at low-trust companies, people at high-trust companies report 74% less stress, 106% more energy at work, 50% higher productivity, 13% fewer sick days, 76% more engagement, 29% more satisfaction with their lives, and 40% less burnout."
The corona virus challenge, like any crisis, provides senior management a huge opportunity to develop a trust-based culture rapidly or, conversely.
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The rapid spread of Corona Virus / COVID-19 reminds us how our well-being is interconnected, and the flurry of heartwarming responses people have expressed in the face of this crisis reveals our enormous will and ability to help one another. These trust will remain when life goes back to normal.
Take advantage of Remote Work
Working remotely is very effective if you can also restructure the organizational processes for how communication happens, how socialization happens, and how coordination happens.
The key to work from home is ‘effective communication’ with employees. Management team should set daily, weekly, monthly tasks for employees and the same should be communicated and monitored well.
If the company is results-driven, whether the employee works from home or in the office should not matter as long as the work is being delivered. Given the developments in technology today, there is a suite of solutions for companies to use such that meetings, discussions and day-to-day work can go on per normal.
Reallocate employees to different activities
Rather than layoffs, companies can reallocate employees to new and valuable activities, like recovery planning, or even loan them to other companies.
For example, cosmetics company Lin Qingxuan was forced to close 40% of its stores during the crisis, including all of its locations in Wuhan. However, the company redeployed its beauty advisors from those stores to become online Influencers who leveraged social media tools, to engage customers virtually and drive online sales. As a result, its sales in Wuhan achieved 200% growth compared to the prior year’s sales.
Stay on top of the real news and Communicate with Employees
The rumor mills are spreading faster than the coronavirus itself, look to reputable sources for the facts. Employers should stay informed by regularly consulting the government’s latest Coronavirus updates and guidance for businesses.
Look ahead and reframe your business
Crises have a highly dynamic path, which requires a constant reframing of mental models and plans. Ignorance at start gives way to discovery and sense-making, then crisis planning and response, recovery strategy, post-recovery strategy, and finally, reflection and learning. This process must be fast and CEO-led to avoid getting stuck in any internal coordination processes and being slow to react to changing circumstances.
In china, some of the fastest recovering companies did look ahead and made such plans. For example, when outbreak started, Master Kong, a leading instant noodle and food producer, reviewed dynamics on a daily basis and reprioritised efforts regularly. They predicted hoarding and stock-outs, and shifted its focus away from offline, large retail channels to O2O (online-to-offline), e-commerce, and smaller stores. By continuously tracking retail outlets’ re-opening plans it was also able to adapt its supply chain in a highly flexible manner. As a result, its supply chain had recovered by more than 50% just a few weeks after the outbreak, and it was able to supply 60% of the stores that were reopened during this period.
Reconsider Leave Policies
The last thing a company would want is for an infected employee to turn up to work just because she didn’t have enough leaves left. That not only hurts the sick employee, but also her colleagues, as well as everyone she may encounter and touch on the way.
For employees who are suspected of being sick or start feeling ill during the day, particularly those who travel around, calling and notifying health authorities should be a priority. Fear mongering and forcing the employee into isolation, against their will, should be avoided at all costs, until advised by a government authority.
Prepare now for the next crisis
The economy has gone through a lot of crisis and also expect a lot more in future. A successful entrepreneur should not be paranoid about upcoming crises. Planning and flexibility is the key to face the reality and drive organisation through a big crisis.
"Corona is an opportunity as well as a challenge to digitize business" says Achim Berg, president of the digital association Bitkom. For him, that means making technologies for web conferences and remote working part of everyday life.
Crises like corona may not affect a digitally transformed business. The impact surely can be buffered at least. Integration of digital technology into all areas of a business fundamentally changes how they operate and how they deliver value to customers. Immediate transformation is impossible due to it’s complexity. But all businesses should consider Digital Transformation to avoid such crisis in future.
You may consult an experienced company like Binalyto to help you make your Digital Transformation.