The lockdown during COVID-19 has created colossal chaos and challenges across marketplaces worldwide. Among small businesses alone, 92% state they have sustained devastating losses and may not be salvageable. Most businesses were financially unprepared and found themselves with inadequate cash reserves to weather the pandemic.
As business owners, leaders and entrepreneurs evaluate their circumstances, they are looking for solid solutions and rays of optimism. But while the economy begins to slowly reopen, the future appears uncertain and downright frightening. Will customers resume their prior buying behaviors? Will financial support programs be adequate to help restore business viability and growth? Will a coronavirus vaccination arrive in time; or will the fluctuating economic conditions send more faltering businesses over the edge?
On the positive side, opportunities do arise in the presence of turmoil, uncertainty and change. Instead of painting the future with dark ominous clouds, businesses can chart an optimistic path forward, explore best business practices and seek out new opportunities.
This is the first in a series of blogs that aims to arm businesses with insights and action steps to steer businesses toward recovery – whether needing to rejuvenate, reposition or reinvent at this time. Drawing from expertise in working with hundreds of businesses – startup and small to mid-sized, large and multinational – we present seven steps to help businesses navigate these turbulent times and emerge whole and sustainable on the other side. This blog focuses on the first step.
Square One: Assess the Business and Damage
- Overall Business Status
While it may be painful, the first step is to take a hard look at how the pandemic and economy have affected the business overall. Critical questions to ask are:
- What does complete recovery look like for the business?
- Is this a temporary situation or will it require a long-term recovery process?
- Does the business model require changes or reinvention?
- Are the business goals and strategies appropriate for the future?
- Financial Status
It’s time to review and update the business financial statements – particularly profit and loss and cash flow statements – to determine the health and sustainability of the business. Perform an analysis comparing this year to prior years’ financial numbers to measure the magnitude of the shortfalls and damage.
- What is the business financial status and cash flow situation?
- Can debt obligations be met or postponed until the future?
- What is the projected sustainability of the business if this economic landscape continues through 2020 or even into 2021?
- Market Status
Next, examine the status of the industry and marketplace. Some industries will be permanently impacted as a result of shifts in behaviors in the new workplace environment (working remotely versus onsite), and new habits of customers (for example, online retail stores versus brick and mortar, casual dressing for work at home). Key questions to consider include:
- Will customers resume prior buying behaviors or have their habits changed?
- Are the business’ products or services still relevant and able to meet customers’ emerging needs and preferences?
- Are customers shifting to competitors that offer more easily accessible or favorably priced solutions?
- Do the website and marketing messages clearly communicate plans to reopen and describe changes in the business?
- Operations Status
During the pandemic, most organizations’ business operations have been affected or shut down completely. These include workers being laid off or furloughed, complications from employees working from home, manufacturing disruptions, inconsistent or lack of distribution, remote or primarily online sales, and greatly reduced marketing and advertising activities. Consider these important questions:
- What is required for operations to return to prior levels?
- Have products or materials become spoiled or is inventory outdated?
- Will supply chains be in place to resume manufacturing and distribution?
- Can trained employees be hired or rehired to resume operations?
- Are the logistics of bringing employees back onsite and keeping them protected with masks and social distancing in place?
Get Into Action
Here are four recommendations to start your business moving toward recovery in the assessment stage.
- Document your learning and observations
Summarize on paper any insights and learning from your analyses. Separate the business issues into categories and prioritize them by importance and urgency needed for action. Make a list also of unanswered questions and identify the best sources and people to address them and provide answers. For example, a CPA or banker can offer resources or suggestions you may not have tapped into.
- Consider different future scenarios
With things still unfolding and evolving, there may not be one answer on how to recover and rebuild your business. Having a single plan may set the business up for further struggles and delays if economic changes and market shifts continue. Planning for different contingencies and outcomes can help the business manage uncertainty and risks with roadmaps that optimize strategies and next steps under various conditions.
- Seek outside support and perspectives
It may prove useful to look at your business through the eyes of others with extensive business experience. Seek out industry experts and trusted advisors who can provide information, feedback and different perspectives. A business coach might be extremely beneficial in your assessment process and identifying options to avoid bankruptcy and propel your business forward.
- Adopt a future-oriented mindset
While it is important to focus on the immediate business needs at hand, it is also beneficial to think a step or two ahead. While rebuilding, there may be best practices or innovations that could leapfrog current situations and provide even better solutions and results. It may be an ideal time to expand your business’ digital presence, explore further benefits of virtual activities and online sales, or consider artificial intelligence and other technological advancements that can deliver new advantages.
The key is to not stand still waiting to see what happens when the business doors fully reopen. Creating and implementing a COVID-19 exit strategy can enable businesses to mitigate risks, adapt to the new normal – whatever that will be – and prepare to rebuild in the near future.
Stay tuned for future posts in this series, A Business Guide to Recovery: 7 Recommendations on how to Rejuvenate and Grow Post-Lockdown.
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