The coronavirus pandemic has businesses scrambling, with many being forced to scale back operations, or close entirely, as lockdown measures keep customers home and cash reserves low.
The International Monetary Fund has said that the coronavirus recession will likely be the worst in nearly a century, since the Great Depression, and data is beginning to show this impact.
On March 23, 40 percent more US businesses were closed compared to the same date in January, according to real-time analytics from scheduling site Homebase.
With consumer purchasing confidence and supply chain reliability at record low-levels, global companies have shifted their focus from progress to survival.
Getting to grips with the numbers
According to Bernard Marr, an international author and strategic business adviser, it’s critical to get a grip on the numbers.
“In order for your organization to act appropriately and neither overreact or underreact, it’s important to have performance monitoring systems to understand your current financial health and cash flow,” Marr wrote in his blog on Forbes.
Governments around the world have opened up state coffers to an unprecedented degree to combat the economic fallout of the coronavirus. One focus has been on ensuring that suitable liquidity remains in place for companies to borrow, and maintain cash flow.
“Since running out of cash is still one of the biggest killers of companies, those that have effective ways to monitor and forecast cash flow, revenue, costs, and more are those that are in the best position to survive a post-coronavirus recession,” he added.
Focus on what matters
Marr also said it’s important to focus relentlessly on what matters.
“Do you have a strategic plan that is concise and accessible? While the answer needs to be “yes” all the time, it’s particularly critical in a post-coronavirus recession. This plan should be on one page and helps your team focus on delivering to your customers and stop doing things that aren’t essential to this plan. Simplicity is key,” he writes.
Marr advises building multiple revenue streams to be more resilient in a recession and reviewing supply chains for robustness amid the COVID-19 pandemic.
The local outlook
Wes Schwalje, COO of Dubai-based research and business consulting firm Tahseen Consulting, says that while many regional any governments have made public statements about supporting SMEs, “it remains unclear how to access these regional programs and whether they are targeted enough for impact.”
In particular, Schwalje questions whether the “financial firepower” behind recovery initiatives is significant enough given that many MENA economies are comprised of at least 90 percent SMEs.
In this “survive-or-perish” environment, the COO says there are effectively two main strategies businesses can take to weather the coronavirus crisis – they can choose to pivot to a more “coronavirus-resilient” service, or they can cut costs.
The Tahseen Consulting expert offers five specific tips for surviving the crisis:
Look at changing how the business works
Leverage the slowdown to look at temporary service changes to how business runs to help ride out the lockdown and reduce costs by 15-20 percent. These service pivots should also link to a longer-term service offering innovation that have a value beyond the immediate crisis.
Reduce your rent
Take advantage of break clauses in commercial leases to target a 30-40 percent reduction amid the commercial real estate slowdown.
Streamline non-revenue generating tasks
Look at non-revenue generating tasks with the idea of outsourcing administrative, repetitive, non-value-add tasks and cutting costs by 10-15 percent.
Cut or furlough staff
After considering all cost-cutting measures with a view to extending the financial runway, it’s time to begin laying off or furloughing non-revenue-generating positions.
Collect overdue accounts
Collect overdue accounts immediately as many businesses may not be operational once the coronavirus crisis subsides and government entities are facing significant budget cuts.