We are all united in this, and the best way to be honest about what your company is going through is through your customers. As long as the contact is open, customers will empathize with businesses facing a crisis.
Hit by the Covid-19 recession accompanied by social distancing and a national freeze, companies are seeing big impacts no matter how well developed they are and need to look again at how they handle and run their company while revisiting their business strategy.
Due to less revenue churn and general uncertainty in the global financial environment, it has become challenging for most companies to keep their financial wheels turning over during the lockdown period.
The effect on startups or small companies will, sadly, be even harsher, because they have scarcer cash reserves and a narrower margin for handling unexpected slumps. The ripple effect of this shutdown will have a major impact on India ‘s economy as it affects all business sectors resulting in low revenue generation due to a possible halt/slump in product and/or service sales. The growth rate of India in FY20-21 is projected to be down to 2 percent from a range of 4.7 percent -5.2 percent as predicted.
To mitigate risks and survive the slowdown caused by the impact of COVID19, start-up entrepreneurs will, therefore, have to adapt to a new set of rules and be aware of the following aspects:
Tracking Expenses Against The Status Of Revenues
It is of paramount significance to businesses during this contagion to perform a fair review of their fixed and contingent costs as well as the real sales. This assessment will provide a clear picture of where a company is financially positioned and help entrepreneurs plan ahead in the current disconcerted marketplace. And after the pandemic risk disappears this technique can be applied.
Checking A Business Model’s Feasibility
Considering that the competition shifts every week (and to make it worse), it is important to rethink the company plan and reassess where the business is based on the sales and expense expectations. This is also a critical moment for monitoring existing financial and cash flow indicators. Beware of what the runway is. The effect on product revenue, payments, loan periods and future bad debt needs to be assessed by companies.
Plan Policies For 3 Months/9 Months/18 Months To Come
To be prepared for all scenarios is important. When we make it a 3-month issue, it will bring an immediate halt to contingent expenses such as recruiting, promotion, travel etc. However, if the recession lasts for nine months to a year, businessmen would need to reconfigure their market plan to minimize contingent spending, renegotiate fixed costs (rent, wages, leasing fees for supplies, etc.) and rely exclusively on the critical survival needs. Revisiting the distribution approach – marketing digitally or in-person – may be a smart idea. Analyze if marketing costs need to be cut or scale-up. If the impact of the pandemic lasts for 18 months or longer, any significant reconsiderations will be required. Compassionate businesses will need to strategise, communicate and act. A review of the sales revenue targets and product schedules along with a new operating plan will be needed. In this situation, entrepreneurs and politicians would have to keep contact between their creditors and staff as open as possible.
Be Patient When Making Investments
Any company needs money to run and the problem that crosses any founder/entrepreneur’s mind during these tough times is where they get the funding from. There are many funds that have ample money to invest for years to come and do not shy away from that.
However, in the short term, we might be experiencing a fall in VC / HNI support. Investors will be more vigilant, and after strict diligence procedures, may take longer than usual to make funding decisions. But there is little to think about, because if we look at the past economic downturns, at the conclusion of an epidemic crisis we will finally see the economy bounce back. Businesses may also ask current creditors for extra funding to expand the runway.
Since they are already invested and have their skin in the game; during this time they’re more likely to help out.
This is the moment when it is all necessary to let it run smoothly in these tough times to realize the seriousness of the situation and make it beneficial for the company. Here are some tips for remaining linked and floating during shutdown:
1. Communicate with the clients transparently
We ‘re all together in this, so the ideal way to stay transparent about what your business is going through is with your consumers. As long as communication is transparent, customers can empathize with the companies facing a crisis. Communicate with clients to consider their understanding of the product/solution you are selling.
2. Maintaining a good relationship with contracting parties
It is obvious that the payment of vendors/suppliers during the lockout may be challenging. However, it would be helpful to give sufficient notice to your vendors, suppliers, landlords, etc. in case there will be any delay in payments so that they can be prepared as well and there is no bitterness in this already difficult time.
3. Managing workers & related optimization
For big companies planning layoffs, the main alternative would be to slash the wages of the highest paying exec/employees in an effort to retain the workers who can least afford to risk their jobs. However, when the time comes to make the tough call, look out for government directives with compassion and offer extra compensation whenever and when necessary. Such implementation should only take place once and not in stages such that it does not affect the morale of the employees.
4. Keep engaged with your team
Your team is depending on you to keep them updated on any step. As a promoter, it is your responsibility to keep your team members engaged through video conferencing tools such as Zoom and Google Hangouts and to keep them connected. Maintaining high morale within the squad is really critical and knowing the overall atmosphere inside the remote workers.
5. Informing stakeholders
Consult with the partners or professional consultants to prepare the best mode of contact with customers, primarily clients and employees. Have an honest conversation with your entire leadership team over the situation and its impact on your business. Every derogatory feedback along with clear explanations will be delivered with utmost empathy.
It is important to stand together in these tough times and support each other in whatever way we can. Stay safe and stay alive. Also, keep in mind that some of the best projects are developed in times of challenge. This one shall pass like all tough circumstances!