The year 2020 will remain very special to people living in this generation. It will be remembered as the year the world economy shut down and business came to a screeching halt. Some of those businesses stood at a cross road. Others stood at a “T-Junction” while some came to a dead end. While COVID-19 carries the disruptive tag of closing the world stock markets in a matter of days, there are multiple other proactive reasons why a business should pause and ponder its future. At such times a business faces three options; business continuity, business recovery or business closure.
Closure may come about because a company’s resource base is in an irrecoverable position. Its future prospects are non-existent. Business recovery, means that business may have to take a corner and make some adjustments in order to keep going. Business continuity, would mean that its resource base could allow it to ride the crisis. It would also mean that there is a continuing need for the business in the short term. So, while such a business may have taken some shocks, with a little reorganization, it could ride the tide, continue at a lower key and scale up its business for the future. Such a business should carefully consider the following;
- Maintain flexibility
It is likely that the business did not come to a dead end because it maintained some savings in dedicated reserves. The business had wisely put aside some treasury funds even when there was nothing threatening the business. This advance wisdom helps the business maintain some measure of flexibility to deal with the crisis at hand. It is these funds that will allow the business to make proactive rather than reactive decisions about its future. While the business may appear to have been wise at this time, I hasten to add that this is not the time to deplete those funds. Those funds should be used in such a way as to have them replenished at the first opportunity.
2. Retain the capacity to do business
While down-sizing and re-sizing are major considerations when it comes to business survival, it is important that a business should not sell off its core competence. Don’t sell off the “engine” of the car and hope to restart the car when the market improves. This is often a hard decision to make because selling the engine is the only part that can bring in enough money to survive the short term. However, consider the three elements below on other things a business could do as it preserves its business core over the short term.
3.Consider diversity as a medium-term security
At crossroads, there is opportunity to observe traffic intersecting your path. While your business does not have to pay attention to the intersecting traffic it may be wise to find out where they are coming from, where they are going and why they are going in that direction. You may discover that you could do some mutually beneficial business with other businesses at the intersection that could pay off in the medium term. Diversifying your portfolio may strengthen your capacity to do business in the days ahead. Who knows whether you will face a “T-junction” in the days ahead? Having some other things going for you may allow you to make a U-turn when you reach a dead end.
4. Capture the opportunity
They say that “opportunity” knocks once and that only “ready” opens the door. Indeed, not everyone in the industry will respond to opportunity because they are not ready to take advantage of it. Some businesses in the industry did not even hear “opportunity” knocking. Others may have decided to wait until things got back to normal before they opened the door. If you are in a business or industry that is not going to shut down, but will suffer some down time, then look for the opportunities that the new environment is offering and scale up to deliver these services. For example, hospitals may face a decline in walk in patients with minor ailments. This may not mean that people are not ill. If the hospital provides a call number for a “roving doctor”, the opportunity could open up a whole new market.
5. Adapt & Adopt
While the business may have developed some core products which it has focused its attention to. It may find that there are accessories and “unrelated” businesses that could be adapted and adopted at almost no cost of adjustment. For example, a chemist, may specialize in specific drugs, but the market crisis demands a supply of other goods and services that are covered under its licence. Though the chemist may not have previously supplied these goods and services, it will cost them nothing to extra to begin offering them to customers. A welder may find that the motor vehicle welding business is no longer viable, but he can take advantage of the rise in demand for beds and make metal beds for the neighbourhood market.