All over the world, government responses to the COVID-19 pandemic are creating a domino effect for businesses. Mandatory lockdowns have shut down production, impacted sourcing, and required many businesses to shut doors temporarily or to cancel events. Social distancing and self-isolation rules have also curtailed consumer spending and restrictions to online businesses means deliveries can be limited.
Government decisions are based on recommendations from public health agencies such as the World Health Organization. Models that forecast the effects of social distancing, and account for factors such as a vaccine not being available for as long as a year, point to COVID-19 having a long-term impact on how we live and do business.
“[For businesses] the first thing you need to do immediately is triage, or what we call a crisis-management mode,” says Nada Sanders, a professor of supply chain management. “The virologists all agree that this has the potential for major disruption.”
1. Cut back expenses
With consumers staying at home in lockdown and only permitted to make essential travel and shopping trips, many companies have seen their incomes dwindle almost overnight.
The first step for businesses is to cut costs immediately. Jesse Crouch, owner of seasonal tourism business ATXcursions, says: “Trim down anything unnecessary, anything you don’t have a contract for. The world is on pause right now and there’s nobody with a reliable prediction about the next several months.”
Likewise, delay any large costs you may have as a business that could be made at a later date.
2. Find alternative sourcing
Businesses should use this moment to find ways to diversify their supplier base. Seeking out alternatives in a range of geographic regions should help mitigate future supply issues, but bear in mind that it’s likely sourcing will be affected in many areas of the world.
“Look at your key customers and products, key suppliers, margins and profitability, and make strategic decisions,” Sanders says. “If there’s an area with no source of supply, it will not be restored in the immediate horizon, based on what the virologists are saying.”
3. Adjust processes
Can you adjust production, operations or services to supply a product or service that has become scarce? Doing so could potentially solve both a supply and a demand challenge.
Scotland-based brewery and pub chain BrewDog, for example, has already repurposed some of its production lines to produce hand sanitiser for local hospitals. Smaller distilleries are following suit, while fashion brands are joining the fight against COVID-19 by manufacturing face masks.
“Figure out if you can tweak your process and produce something that fits into what the market wants while using the sources you have,” says Sanders.
That’s what technology training firm Building Momentum did when the 3D printers it sourced from China became unavailable to use in its training programmes. Co-founder and CEO Brad Halsey says the business had to figure out how to change the curriculum so took advantage of the abundant supply of robotics platforms. The team swapped the two technologies in their training exercise.
“The scarcity of 3D printers forced us to think of new ways to train by showing how to solve a real-life problem, and then it was a matter of messaging to the client,” he says.
4. Change with the market's needs
The UK government mandate for cafes and restaurants to close their doors to customers who dine in has had a profound impact on many hospitality businesses. Although many have had to shut down temporarily, others have found ways to maintain some opening hours by adapting to new market needs.
Healthy fast-food business Leon, for example, has turned a number of its restaurants into mini-supermarkets shops. It aims to meet the needs of local customers who are now eating at home and want ready-meals, fresh produce and groceries.
This is one example of how a company can provide adapt to a changing reality. It’s an approach that has worked for decluttering and life coach Gari Weilbacher. While she typically goes to clients’ homes to help them declutter, she recently introduced virtual sessions via videoconference.
After hosting successful virtual sessions, Weilbacher realised this could be valuable for people suddenly working from home.
“Virtual decluttering can help clients who want to set up smart work areas at home and become productive in a new environment,” she says. “It fulfils a very specific need as a result of the coronavirus—and as a business person, it helps me with cash flow.”
5. Seek financial relief
Find out if you can get financial help by checking the UK Government’s official website – the go-to for information on state aid to help businesses through the coronavirus crisis.
Also keep an eye out for other sources of funding support that could become available, such as those that are specific to your industry. Make sure you’re in contact with, or on the mailing list, for your industry body in case new avenues of help arise.
Although the lockdown will eventually pass, the long-term impact of COVID-19 means any peak business will likely be affected. If that’s the case, take a look at ways to help tide you over. Crouch anticipates the summer season will be impacted so strongly that ATXcursions will need to explore emergency financing. “Our business is healthy otherwise and we predict strong performance in the next several years,” he says.
He adds that from his previous years as a technology consultant, he’s learned to ask for more than the estimated need.
“You can always pay your loan down faster if you happen to have more cash,” he says.
6. Put the downtime to use
During unprecedented times, it’s difficult for small-business owners to act beyond survival. But, Halsey says, the advice he tries to give himself is: Breathe and think.
Business owners don’t often have downtime, which is necessary for creative thinking and strategic planning. He says this is a good time to “de-focus”. Instead of only looking through the microscope at questions such as how to meet revenues, look into the telescope and consider what 2023 or 2025 will look like. Think about what it's going to take to fulfil that plan — perhaps a new skill set — and use the downtime to learn it.
“You can’t do much about next month in many cases, so take a breath and think about what you can affect, which is 2023.”