Infecting almost 3 million people across the globe and expected to spread further, the COVID-19 pandemic has weakened public health systems and rendered even the most advanced country vulnerable–not only in the aspect of medical care but also in terms of economic health.
Several businesses have been experiencing a massive slump on revenue, as normal operations are shut down, complying with the government’s lockdown protocols and curbing the spread of the virus. To prevent business financial loss has been the priority of many businesses across the globe. To do so, this useful and robust project management podcast will help you to execute it. Additionally, having successful scope management techniques are needed.
This is an especially difficult time. The truth is the effects of the temporary losses now could stretch further into the months ahead, even as lockdowns relax or get lifted altogether. Despite this tragic economic crisis, however, it’s possible to avoid business failure. Below are some of the action plans you can do to keep your venture afloat, support your employees, and ride out this pandemic:
- Prepare a cash flow forecast to improve liquidity.
Cash is king, and it reigns supreme–most especially during a crisis. Take stock of what you have now and what you’ll be spending on to overcome risks in business. At the very least, prepare a financial forecast of where your money will go for the next three months. From here, strategize how you can keep cash from going out, and maximize what comes in. Below are some tactics you can try:
On cash going out:
- Negotiate with your vendors or suppliers. Manage financial risk in business by overseeing major expenses. Ask vendors if they can offer payment extensions. If they can’t yet, arrange for a 60-day reprieve. Of course, there’s no guarantee that they will grant this–and you would have to be prepared for that. There’s a good chance, though, that they will agree to the terms rather than lose a customer during this time. Take note that this applies to your landlord or property manager, too.
- Tread on salary cuts carefully. As much as possible, you’d want to retain the pay of your employees to support their personal needs during this crisis. That said, salary cuts should be your last resort. If you do have to proceed with it, do it with caution and compassion.
Start with those with leadership roles, then retain the salaries of the rest. If the need arises, gradually apply the salary cuts, going down the organization’s hierarchy. At every step, inform employees what’s happening and why you need to do this. More importantly, reassure them that once things get back to normal, salaries will go back up. Keeping your employees’ welfare in mind is among the first priorities in how to avoid business failure in the long run.
On cash coming in:
- Offer discounts to clients and customers. Unless you’re in the business of providing essential goods, you’re going to experience a huge slump in your sales. To counter this, provide discounts–say, free shipping, first-timer incentive, or buy-one-take-one.
If you’re in the service industry, there’s a good chance that your clients themselves will be asking for payment extensions. While you may give them that in consideration of what’s happening, you may also provide discounts for those who would want to pay now. This can encourage settling accounts, a crucial step in how to reduce financial risk in business.
- Apply for loans. Improve liquidity by maximizing lines of credit. Check out the government’s loan programs for businesses. There are also private enterprises, like Facebook, offering cash grants. Check if you’re eligible.
- Take advantage of wage subsidies. Some government programs are focused on covering employees’ salaries. Check if there are similar programs in your locality. Preventing loss in business means exhausting all options to keep it afloat.
2. Improve relationships with your stakeholders.
The last thing you want during this crisis is to lose contact with customers and partners you’ve been doing business with for the longest time. There’s no monetary value in relationships per se, but it’s an important step to reduce business risk, survive the crisis, and grow your business in the long run. It’s important to spend considerable time communicating with your stakeholders. Be proactive in reaching out to them, especially to clients. Follow these tips:
- Create a dedicated team to handle customer relationship management. This team will be responsible for answering queries and concerns from your stakeholders. Likewise, they can create content for your online platforms, to keep your stakeholders informed. Take note of the new guidelines for online marketing during COVID-19.
- Use different tools. Make sure that the platforms you use are appropriate for the kinds of communication you have with customers and clients. Sure, your social media page and website are good for mass information, but if your client has a particular concern that should be discussed in length, you may want to shift to video conferencing tools such as Zoom or Skype.
- Be personal and sincere. Times are tough. One way or another, your clients are experiencing difficulties. Exercise empathy and show genuine care when communicating with them. Ask them how they are, how they’ve been coping with the lockdown, and what their concerns are. Avoid hard-selling. One of the lesser-known business risks in these times is reputation damage from being seen as capitalizing on a crisis.
3. Equip and empower your employees.
It’s not just your external stakeholders who need extra attention. Your employees should feel supported, as well, especially because the flow of cash depends on their productivity. When there’s a loss of motivation in your workforce, expect a business loss, overall. If you’re adopting the work-from-home arrangement, below are some tips to help it succeed:
- Communicate clearly and regularly. Make sure that each employee knows what they’re expected to do and when they should deliver the outputs required of them. Similar to communicating with clients, ask them how they are regularly. Remember, their mental well-being matters greatly during these times.
- Provide them the right tools. At the very least, they should have a laptop, a stable Internet connection, and the software programs relevant to their tasks such as apps for communication, file storage, etc.
- Go easy on micro-management. It’s tempting to micro-manage, in terms of monitoring the work progress of your employees, precisely because you don’t see them physically. However, calling them up constantly or asking what they’ve been working on will only backfire. It will distract them from their tasks and make them more anxious in this already tense situation.
Instead of checking on their progress every day, consider doing it less frequently, laying down your expectations at the beginning of the week, and then asking for a progress report at the end of it.
4. Consider taking the business online.
While crises are indeed tough times, rendering everyone vulnerable to the worst of financial risks, it can’t be denied that it also has the power to push people to think outside the box, find ways to cope, and even thrive.
Instead of being drowned in that defeatist mindset, as your store or office was shut down, explore new methods and strategies of delivering goods and services. Remember, the success of your investment is based on your attitude, not your income or revenue. Venture out and try new things for your business. Perhaps, it’s time to take it online.
Across industries, this has been the norm. Restaurants have been posting their menus with order forms on their social media pages. Fitness centers have been live-streaming their yoga sessions and spinning classes. Local markets have been creating closed Facebook groups, posting their available produce. Use online platforms not only as a communication tool but also as a sales or marketing channel.
Financial losses are inevitable during this health crisis. No business is immune to the ill effects of this pandemic. Nonetheless, it’s possible to stop the financial bleeding and save your venture from total business loss. Be proactive today. Remember, prevention is better than cure.