The world is in the tight grip of a virus that has shut down countries, overwhelmed hospitals and sent businesses into a tailspin. To curb the spread of the deadly virus, countries have placed strict measures on movement of people and consequently goods and services. Working from home has become necessity for personal safety. Businesses are downsizing, reducing costs, and unfortunately letting go of all but essential staff.

While some essential businesses may thrive in this challenging environment, most of the businesses have no option but to innovate if they plan to survive these hard times. To survive the pandemic requires a level of optimism that the needs that a business serves will still be in existence after the pandemic. A long-term outlook will contribute to the implementation of strategies designed to beat the economic crisis occasioned by the pandemic.

Innovate and automate

In each area of the businesses, revenues can be enhanced, and costs reduced through using technology led solutions. If the customers are not coming into the shops, warehouses and offices, the business must take the service to the customer. Serving customers holed up at home requires that the customer can order the goods and services from their home, receive the goods or services, and get billed seamlessly. Online buying is no longer a fringe idea, it is mainstream. A strategy to survive the hard times is to ensure all the company products are available online and orders can be processed timely from the online portal.

Where the company has a subscription-based service, the billing can be automated using a simple accounting system with online component. Automated invoices are scheduled and sent at a cutoff date. This cuts the cost of hiring staff to write invoices and deliver them to customers.

Conserve Funds

With reduced revenues businesses must turn frugal and conserve funds. This strategy calls for not just cost-cutting but applying funds in the most effective way. To conserve funds, money should be spent sparingly on cost centres. The business should develop tighter budgets in line with the reduced projected income and cut unnecessary costs. To stabilize the revenues, a percentage of inflow should be saved in an accessible saving account. This emergency fund will only be utilized when necessary.

Funds can also be conserved by cutting fixed costs. Releasing extra space and bargaining for pandemic discount on remaining cost will reduce rent. Furloughing extra staff and signing new pay schemes for remaining staff will help manage payroll costs. Where high speed internet is available, back-office staff can work from home to conserve space. The staff should however be given training on productive ways of dealing with an office in a home environment. Bargaining for discounts with suppliers of important materials and services will lead lower cost of products and services.

Change of Business Model

For the business to survive it must exhibit agility, ability to innovate in production and adapt. When the pandemic broke out, some apparel makers quickly invested in a new line of production making face masks. This agility enabled them to take advantage of the emerging market for face masks before everyone jumped in. Producers of detergents and soaps added sanitizers to their portfolio. Restaurants quickly changed to take out and delivery model.

Quick thinking and flexibility to change business model is one survival tool that can help cope with the current crisis.

Be open to dividends instead investments.

Managers are known to continue operations even when winding up is the optimal decision. In these uncertain times, if a business opportunity has dried up and there is no way of pivoting and retooling quickly, a decision to wind up must come early enough as a stop loss mechanism. There is no reason to continue operations where such operations add no value and does not enhance survivability of the business.

Undertake new investments only based on surviving the pandemic by changing the business model. When the business has available cash but no investment that can add to the owners’ wealth, distribution of such cash as dividends to the owners might be optimum decision.

In Summary, the pandemic is a new reality and is poised to continue for the foreseeable future especially in Africa where vaccines are not available in sufficient quantities. The occasional disruptions, closures and restrictions are likely to be the new reality of life. Small and medium sized businesses have no choice but to adapt to this harsh reality. Survival and modest growth over time should be the main goal of business in these times. Managers and owners must plan with sufficient foresight, inject flexibility into their plans, spot opportunities and grab chances quickly and build resilience in their business.

Disclaimer

The Content of this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. The author does not purport to know the circumstances of any business or individual. For targeted advice to your business situation contact the firm. 

Salah Abdi Sheikh is the Managing partner at Josiah, Salah & Associates. He contacted at salah@josiahsalah.co.ke