The Corona virus business crisis results with many businesses, globally facing a survival threatening reality; some are facing a total stop of their business while many others are experiencing a sharp decline in their revenues. The longer the situation continues, the more severe will the impact on businesses be.
As painful as the situation may be, this is also a perfect time to think, act now to improve immediate survivability, be ready for the “day after” and make sure the company has a clear plan how to be ready for the next crisis, as it is quite obvious now that the next crisis will come.
Naturally, at times when revenues decline businesses direct their attention to costs, in the effort of spending as little as possible during this period hoping that the period will end quickly and that cash will suffice to prevent bankruptcy. For many, these measures have already proven to be insufficient and for many others it’ll end in a similar way.
One thing, any surviving business should learn from this reality is the importance of building and sustaining business performance buffers, and particularly sufficiently large cash buffer. It is clear today, that the net Corona virus is just a matter of time, and the only way businesses can be prepared to survive the next crisis is by having these buffers.
However, in the short term, there is, for many businesses an alternative way to the one most take. A way that may help them pass the crisis smoother and more importantly be ready to get out of the crisis into a rapid growth that will eventually lead to the creation of these buffers.
The crisis enhances and emphasizes a very common business behavior – focus on cost. This behavior is wrong in regular days and may turn out to be detrimental during these crisis days. The return on management attention is always by far greater when focused at revenue generation. It is much more critical these days. The world economy has slowed down, but did not stop. There are consumers and businesses that still operate and buy. The first question, leadership should ask these days is; What capabilities we possess that currently have demand, and that it is highly likely that this demand is not well served?
This is a different question than a company should normally try to respond and it calls for the flexibility of mind to realize that the opportunities exist in markets that are meaningfully different than the strategic markets the company operates in. A good example is car producers that started producing Medical ventilators. This is a true test to “out of the box” thinking, that opens the door to rapid opportunities of revenues.
When revenues options are identified, the company can then ask itself what are the costs that must be kept (or even increased) to enable capitalizing on these new opportunities, and what costs can be reduced. This will ensure that cost reduction does not also cut the opportunity to generate revenues, and will allow best alignment between the company’s ability to make money and the company’s expenditure.
The above two actions take care of the short-term need, however focusing only on them may put the future at risk. The new business opportunities do not necessarily fit the long-term strategy and the cost cautiousness may limit the capacities and skills required to service the strategic market. Moreover, the crisis does create new growth opportunities in at least two major frontiers and those that will be ready to act fast about these opportunities will win them.
Therefore, it is imperative to devote time and attention now to getting ready for the “day after”. This requires that the company makes a serious investment in understanding the possible ways that the markets and demands are going to change. And they are going to change, for various and clear reasons, such as; the increase in unemployment, the cost reduction and the anticipated increases in taxes will lead to lower consumption, the fear of the next crisis will lead people to be more cautious about their expenditure, the changes in international transportation, in the hotel and restaurant industries and more. All will affect the buyer behaviors. Companies need to understand how does these changes going to affect their markets, their demands and accordingly their strategies.
Based on the modifications to their strategies of growth companies will need to plan and execute a sequence of activities that will advance their sales cycles as much as possible, so that as soon as the green light to return to business in lit, the cycle time for closure is as short as possible. In accordance, companies will also need to plan ramping up capacities to support the sales growth.
AS a meaningful contributor to this growth plan, one of the sad, yet unavoidable effect of the corona virus is bankruptcies. Some of your competition is not going to survive the crisis. Identifying these companies and being ready to acquire them opens the road for acquisition of both markets and capacities at virtually almost no cost at all.
We are in a crisis period, which is also an opportunity period. As always, those that identify the opportunity and prudently work towards capitalizing on it will gain the most. Do not stay behind and wait so you do not lose this opportunity.