How to do business during the coronavirus pandemic

First, you need a strong business plan. Whether or not a recession happens, it is likely that the virus has already or will in some way affect your business.

By YEHUDA MICHAEL
A worker wearing a protective face mask and gloves prepares food for delivery following the coronavirus outbreak. Dubai, UAE, May 12, 2020. (photo credit: REUTERS/ABDEL HADI RAMAHI)
A worker wearing a protective face mask and gloves prepares food for delivery following the coronavirus outbreak. Dubai, UAE, May 12, 2020.
(photo credit: REUTERS/ABDEL HADI RAMAHI)
The coronavirus outbreak has caused an unexpected crisis in all sectors. Many businesses and entrepreneurs have found themselves struggling. Whether or not a recession happens, it is likely that the virus has already or will in some way affect your business.
In order to reduce the impact, you need to revise your business plan, manage your cash inflow and outflow wisely, use risk-management tools to better prepare for potential risks, revise your marketing strategy, and communicate with policymakers to address your concerns.
First, you need a strong business plan. And you need to adapt it in accordance with the changing business environment. The first assessment either banks or other entities will make before giving you a loan or fund is looking at your business’s strength and ability to survive, through your business plan and financial statement.
In such a time of crisis, you need to list your top three customer segments. You need to look to your data to identify the segments that generate the most revenue. See how you can address their needs first.
Make a list. Who would you serve first if you could only serve one segment? Who next? And so on. This will help you to have a liquid asset in hand.
Think about your value proposition. This crisis is your time to adjust your business based on people’s changing needs and wants. The questions you must ask yourself could be: What are people’s main priorities right now? Who knows? Some unexpected consequences of the pandemic might even add some game-changing value propositions to your business.
You need to reduce your channel-related expenses in every way possible. You have to be very creative and think about the most cost-effective and efficient channel to use to deliver your value proposition.
If you are not able to keep your store or office open because of financial stress caused by the coronavirus pandemic, you should consider alternative channels that enable you to continue doing business. Maybe you should start to sell your product online, or start delivery, or partner with other businesses.
Especially for small businesses, customer relationships are crucial to your survival and continuity. Those of you who have products or services that are in high demand might currently be facing supply-chain challenges related to the closure of borders. You need to communicate with your customers and explain the situation.
For those of you that have less demand and enough supply, try to communicate with your customers and look for ways to offer them discounts, long-term payment plans, or other financial incentives to continue their patronage in ways that do not impact your cash flow.
The first and most important action you should take during this time is to reduce costs as much as possible. But you also still need to have some income to continue your business.
List your top three revenue streams. Check if those revenue streams are impacted by the virus outbreak. If they are, think about the ways in which you can improve them or how you might be able to add a new revenue stream.
Check if you have a tax-payment extension from your local authority or are able to access any disaster-assistance loans.
This is also the time to think about how to use your resources effectively. You have to assess the strategic assets you need in place now.
FIRST, LIST the key resources linked to your business’s key activities. Rank them according to their importance and associated costs. Build a cost-benefit analysis paradigm to see which resources to use and prioritize accordingly. If your key resources cost you more money than the benefits they produce, do not use them.
You need to be creative and find ways to continue operating. Assess what functions can be done remotely and what must be completed in the office. Employees whose tasks do not require them to be in-office can be set up to work remotely.
If you have a lot of employees, use two shifts to still keep working and keep your staff employed. Many small businesses are having employees work remotely for the first time. Train your employees on the new technologies you will be using and set up those systems.
It is already widely recognized that the COVID-19 outbreak has affected global supply chains, and that it might take months before they get restored. The best thing you can do is to pick up the phone and talk directly to your suppliers about how you can work together toward an optimal solution.
Since suppliers do not necessarily know what is most important for you, you need to call and communicate with them. Let your supplier know your priorities and suggest solutions.
Many small business owners begin to spend a lot of money once their businesses have grown. They start adding things such as offices, business travel, new employees and so on. Now it is time to cut all superfluous spending.
Negotiate with banks for interest cuts and suppliers for payment extensions. Believe it or not, it is in your bank’s and suppliers’ best interests that you survive. Even though they are also struggling, they will struggle more if they lose you as their client.
Inadequate cash reserves are the top reason that start-ups do not succeed. Now you have to increase your operating cash inflow and decrease your operating cash outflow. You need to suspend or stop investing cash outflow (which means do not invest in expansion or new equipment and so on).
In a small business context, if you are using your business profits for personal benefit as a dividend payment you should suspend that as well.
Use risk-management tools to identify and respond to risk. The outbreak of COVID-19 might have been a factor in your business’s struggling state, but it is might not the root cause.
The root cause could be ineffective resource management, premature expansion, or other reasons. This is the time for you to perform a root-cause analysis to see what makes your business vulnerable. Use the probability and impact matrix to prioritize risks that need a detailed risk-response plan.
Make sure to communicate clearly and consistently with your customers. This is a good time to focus on your existing customers and let them know that you are still committed to servicing them. Create easy ways for your customers to purchase your product and services. Use your social media presence to keep your customers up to date.
Countries are enacting different measures to support their economies. Your voices are crucial in this moment of crisis. Small businesses are the backbone of any country’s economy, and governments are aware of this. Join forces with other entrepreneurs and propose ideas to your local policymakers.
On a personal note, I suggest that you be active, communicate and show leadership. This is not a holiday! Keep working and keep reading. The more you know and learn, the better business leaders you will be.
The writer is program director of MASHAV Carmel at the Foreign Ministry.


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