5 practical business changes to survive Covid-19
´The new normal´ for businesses in a few words:
Being a flexible organization used to be desirable, but now it is the basis of your business survival.
Digitalization is no longer just a solution to a problem, now it is a ´must have´ to creatively adapt your business.
Cooperation with previously unlikely partners now offers an effective way to generate collective new gains.
The global crisis has forced economies to pause and has presented businesses with the unique opportunity to use these great challenges to make meaningful change.
This crisis has amplified flaws and inefficiencies in businesses and in business systems under high pressure. This provides businesses with a chance to improve and re-evaluate their entire business model.
In this article we will discuss the five important changes to defend your business against the effects of Covid-19 and how to prepare your business for change.
Are you aware of these necessary adaptations and does your business wants to take specific steps in these five areas? Services are available to guide you with your business adaptations. Just as your accountant and your banker help you in their area of expertise.
1. Stay alive
2. Stabilize and plan ahead
3. Reshape your analytical tools
4. Turn digitalization into your advantage
5. Change your business process
Each of these five business adaptations need specific focus and can bring new opportunities. Ensure that your business prepares to reshape its basis and aims for a well-prepared future.
1. Stay alive – cash, value and vision
Needless to say, this is a necessity instead of a change, but worth being briefly discussed here.
Businesses need speed and stability to survive. Many businesses have been handling things pretty well despite all uncertainties by managing every detail of the business during this crisis. Leaders are making necessary difficult decisions based on entrepreneurial expertize, on business sense and gut feeling, combined with available data and knowledge of qualified teams.
Have you made the right decisions?
Cash control and short term
Businesses have focussed on cashflow and liquidity and established sound short term and long term financing. This may be a testing endeavour on the relationship with your banker these days but forms your business´ backbone now and later.
Alignment with long term clients is needed on how to deal with current outstanding debt, as well as become clear on their latest business planning for the near future and longer term future. Will their business diminish? Or will they stay in business and should you now come to an agreement on a payment schedule of any outstanding amounts?
Consider making similar arrangement with your providers.
Stay true to values and vision
Leading a business has become more complex. Being transparent and honest about what is actually happening is of ad most importance to maintaining and deepening trust between management and employees. This includes emotions and showing empathy to make and maintain people connected. It is important to stay true to values and vision.
Taking your responsibility of caring for your employees clearly consists of arrangements for ongoing salary payments. Adequate application and communication of the specific Covid rules for your business. Discuss the implications with your accountant and plan accordingly.
At that moment also consider how to stabilize and plan other factors in you company….
2. Stabilize and plan ahead
After the first storm has hit your business, are you ready to further stabilize and plan ahead? Now it is time to consider a few things. Prepare your business for another storm. Plan how to deal with all aspects that you have faced during this crisis´ first wave.
Evaluate how agile you have been as a company. How well for example did you communicate internally with all the new working methods and with the high levels of uncertainty? If your team did great there, excellent, if not you should consider levelling up these interconnective skills and the awareness of the need for stability and change.
Make balanced decisions
Business leaders should consider not only having a mentor or a coach who is not involved in the company though understands the reality of your job and business. Coaching can contribute to well-being and self-reflection for leaders. This leads to making balanced decisions.
Having to lay off key employees can be a traumatic experience and needs to be made from a clear and balanced vision. Another aspect of laying off top talent makes it likely they will find a job somewhere else and will not come back when the crisis is over.
This is an important reason for businesses to act very strategically for the next year.
Can your business also make these, and other decisions based on adequate analytical tools?
3. Reshape your analytical models
What makes it more complicated for leaders to handle the unpredictable and uneven recovery of the market?
It is the fact that historical data and forecasting models will not be able to accurately predict what demands will emerge. Reshaping your analytical models and adding estimated new data seems therefore essential to support your operational decisions.
Choosing and providing the right technology to maintain clear internal and external communications and to make balanced decisions. Find ways to maintain motivation and productivity among your employees.
Analyse financial scenarios for existing and new types of clients. Choose strategically and be agile to scale-up after the storm passes.
Technology may be the saviour of your business here….
4. Turn digitalization into your advantage
In eight weeks´ time we and our businesses have adopted somewhere close to five years in digital adoption. Covid-19 has led to structural change in digital engagement and remote working models. Beginning of 2020 this would have been hard to even imagine.
Plan on using digitization
Use digitization to your advantage. Plan internal training on the new technologies and specific practical applications that have worked well or that should be used differently. Implement it now and determine your new policies. Many businesses have adequately shifted to remote-working overnight.
This instantly enables them to mobilize global expertise, organize a project review with a large number of people, and respond to customer inquiries more rapidly by providing everything digitally, from product information to after-sales support.
In effect, digitalization and remote working have driven the fast execution that we’re all experiencing in our organizations.
This change in digital adoption may now be substantial enough to reconsider your current business model….
5. Change your business process
Now certainly is the time to look at your business´ internal processes from two perspectives: What is the ´low hanging fruit´ in my business processes that we should optimize now? And how do our ideal processes interrelate to the entire supply chain?
Supply chain optimization by working together
Since everyone is affected by this global crisis, businesses should evaluate how working together could be beneficial. Important therefore is maintaining and establishing trust with all business stakeholders and using this opportunity to optimize entire supply chain processes - ideally digitally. A consideration should be made by businesses to collaborate with complementary competitors and possibly even to combine resources to launch new products that may be in greater demand.
Your business may be stronger working together while combating the downfall of the economy. We all realize the strong business mind shift, but the integral recuparation has to start somewhere.
Business model including new types of clients
Evaluating your business from a higher perspective then your business processes alone: re-evaluating your business model is another significant consideration during these changing times. Businesses in various sectors are changing the way they offer value to different customer groups during this crisis, for example by now instantly offering product and services online.
Think about how to maintain existing customers and offering added value to different types of customers may greatly contribute to your success and long-term survival.
Prepare for further change
It is during a crisis that responsible management practices and fair stakeholder treatment is especially visible. Making decisions strategically though quickly, transparently and equitably will go a long way.
While it is difficult to know what will happen next, it is possible to draw on the lessons of the past few months and to see them as opportunities for improvement. Businesses need to work on responding to the current crisis while simultaneously building to thrive in a new reality that focuses on agility, digitization, and collaboration.
This includes restructuring your financial analysis models, optimizing your business processes, re-evaluating your business model, reskilling your workforce for a digitized economy, and considering non-traditional collaborations.
All of this needs focused strategies to ensure success.
My next articles will discuss these 5 business changes in more detail. If you have any questions, please feel free to reach out via LinkedIn or via my website.
Joris van der Heijden is Controller for a day. He provides guidance of European small-medium-sized businesses (SME) in Spain and The Netherlands that need more financial and business control.
These five business adaptations discussed in this article are part of the services that Joris provides.