Business survival with COVID-19
SMEs Perspective – An unorthodox business plan
I am encouraged to write this blog post with the mischievous disturbance from my little son Nimrodh because the time that we spend right now at home due to COVID-19 provides a space for us to learn things that will help us not to repeat mistakes once again with the same mistakes.
COVID-19 is already hampering the world economy. It is essential to have a better understanding based on the facts available regarding the coronavirus to distil anxiety, worry, and fear. Before COVID 19, the expected global economic growth was projected to rise 3.3 % (IMF). However, the IMF now expects 2020 world growth to be below the 2.9 per cent rate for 2019.
Irrespective of the world economic growth decline in 2020, I am trying to discuss through this post how we can recover our businesses amid this world catastrophe. All industries equally or partially are damaged by this catastrophe and regaining it back to usual status takes considerable time.
As anxiety develops in us by going through unimaginable social media posts, the psychology of an average person is neurologically fluid into a negative thought process beyond the capacity threshold of a human. Therefore, every entrepreneur who is in the process of going through this difficult time passage needs to awake their entrepreneurial mindset to rebuild/rebegin their business differently and powerfully. My effort here is to encourage entrepreneurs to think once again differently and move forward as economic catalysts.
It requires freedom for entrepreneurs and business leaders to open their creative mindset for innovative solutions for potential problems that have already been foreseen. Therefore, I suggest you revisit your business management practices within the given freedom and innovate to rebuild/rebegin your business differently.
In this post, I write a few strategies where you will able to understand them through your business management experience; hence implementation could be more straightforward. This writeup proposes you to prepare an unorthodox business plan. It needs to consider the following areas among others when making an unorthodox business plan.
Cash flow planning for the next six months
• The most important part of your business plan for an existing business is the planning of the cash flow statement for the next six months. As you will have to rebuild/restart it, don’t wait until you go office, the time came to you to prepare your cash flow plan for the next six months (minimum). Therefore, I suggest you discuss this matter with your Accountant. Your suppliers, customers, employees, and every other stakeholder have been affected by this tragedy; thus these matters need be considered by observing and reconsidering other matters such as low-cost credit lines, and compliance requirements of your statutory and mandatory payments.
Building a financial reserve
• It is evident that the cash cycle of your organization does not work as usual because every stakeholder of your business went to a standstill. Many SMEs are not cashed rich and not practicing like an individual who saves money for future needs. I have seen very less in SMEs’ balance sheets that it has liquid form assets such as cash under fixed assets. It means to me that many business organizations will face the difficulties of paying their employees’ monthly salary without it making the cash cycle work.
Employees are the principal segment of your business; therefore, the continuation of their service is required by remaining them with you to rebuild/rebegin the business. You will able to buy your raw materials and similar kind on a credit basis from suppliers, but employees will not be able to work on a credit basis. Unseen catastrophes like COVID 19, Spanish flu in 1918, SARS, etc. have popped up and could be popped up once again in the future in the same name or another; thus it compels us to build a financial reserve (over a period of time) in your organization to appear it under the fixed assets in your balance sheet. This fund will help you one day to make the employees happy for paying their salary for at least three months until you get back to the usual business cycle.
List down your mistakes
• It is the right time for you to analyze your deficiencies in your business management practice, and mistakes or wrong decisions/practices you made with the business. Therefore, it requires you to list down the mistakes and wrong decisions and bad practices to make them analyzed and corrected soon.
Adopt the right technology
• Don’t miss the opportunity. This is the right time for you to grab the technology that you should adopt to your business. In examples:
(a) if you have a static website, have a dialogue with the right professional how you can convert into a live web site.
(b) If you sell your products traditionally, then need to research how you can adapt to an online sales platform.
(c) If your staff is doing things manually, this is the time to think about how you can put them on an online platform.
Applying better financial management practices
• If you had carried out your financial management practices inappropriately, it is advisable for you to correct them to face the uncertain future. If you have spent money without a plan (budgeting), this is the right time to put the future spending into a plan, and then you are free from issuing postdated cheques, pocketing cash from your own business, etc. If a business has proper financial disciplines, credibility with others can be built easily, the money will be saved for further investments, and importantly, the business will run by your employees systematically with less support from you.
• It may be the right time for you to think about your business expansion. You can look for new business opportunities such as new business alliances, potential export markets, attracting a new investor and planning out new geographical areas locally to improve your sales.
• Despite your learning about COVID 19 and its precautionary measures, it is advisable to study the availability of low-cost credit lines, the extended government support for you to restart your business without having many struggles.
• It needs to be vigilant by recognizing the areas where your business is affected by this catastrophe. Remember to keep a space in your unorthodox business plan to identify those areas. Your sources of input supplies, infrastructure, and exportability, etc. would have been affected severely. Therefore, we need to find alternative ways and means to recover the damage. Studying these matters is highly recommended at this time before the restart because your readiness is essential not to struggle once the business restarted.
Restructuring the business
• You need to allocate a space in the unorthodox business plan for restructuring the needs of your organization if it is a medium/large sized business (SME). If the damage is severe to the business, it is advisable to get ready to restructure the organization with a new strategic plan. Because right now, your strategic position would have been changed due to various reasons such as sharp local and global economic downturns, the market lost and deficient demand.
Be Safe – Stay at home
By Chamara Bandara – Consulting Entrepreneur
Excellent ideas and advice.