Come Back Stronger and Better.
The Covid-19 pandemic has wreaked financial havoc around the globe, leaving many companies and small businesses scrambling to formulate effective response strategies. In Malaysia, the government has implemented different-level Movement Control Orders (MCO) to effectively curb the spread of the virus and flatten the curve, but these lockdowns are turning into economic knockouts as many businesses are ordered to shut down. To help the people and businesses during lockdowns, the government had introduced a total of eight economic stimulus packages worth RM530 billion.
While the comprehensive economic consequences of this Black Swan event are still indefinite, one thing for sure is that this pandemic has forever changed the way companies in all sectors and regions do business.To reopen and overcome this period of uncertainty, many businesses will need to adapt and reinvent. Here are some ways to help you get your business back on track.
1. Review Your Business Performance and Assess the Financial Damage
The first step on the road to business recovery is to review your business’ performance and determine how severely your business has been affected. There are many stages involved, starting with hard numbers relating to sales, profits, and cash flow. Firstly, update all your financial statements and make a comparison report to last year’s numbers to assess how much your business may be decreased. Next, you might start to evaluate your business’ short-term liquidity. You may want to instil a short-term cash flow monitoring discipline that allows you to predict cash flow pressures and determine whether your business has enough resources to pay its debts timely.
Based on your review, you can subsequently formulate a set of implementable measures to make some desired improvements and identify financial resources to help you recover.
2. Adjust Business Goals
Now, with an idea of where your business currently stands and what types of financial resources you need to get everything back on track, you will have to do some fine-tuning. Particularly, you may need to consider how your business can pivot to adjust to a new normal by adjusting your business goals accordingly.
One of the most important aspects to put emphasis on when calibrating your business goals is to get a clear picture of your business’s strengths and weaknesses. What was working before may not work well now, so you will have to see where you can adjust and improve to remain competitive.
Set realistic business goals based on your planned adjustments as well as on your local consumer sentiments. It’s advisable to take a phased approach by evaluating your business goals on a monthly basis as to not be completely caught off guard by where your business stands.
3. Consider Your Funding Options
Unless your business had a substantial cash reserve pre-pandemic, it’s most likely that you may need some working capital to kickstart your business operations coming out of it. By boosting your available capital, you can fulfill immediate business operation’s expenses such as rent, utilities, property management, outstanding credit and etc.
In the case you are considering taking a business loan to get your business back on track, be sure to review your business and personal credit scores as lenders want some reassurance that you are capable of repaying the loan.
4. Find New Revenue Stream
If you are capable to find new ways of generating revenue for your business, kickstart this as early as possible to help drive a regular income stream to your business. To turn an existing crisis into an opportunity often requires reframing the problem or looking at the issues through a different perspective. You may use your current business model and translate it into another business that is essential during this time of distress. For example, if you are running an organic food shop, you can explore the option of setting up a subscription-based service.
One thing to remember is that you don’t have to stay in your lane, but you should stay on the same route.
5. Reconnect With Customers
Many non-essential businesses have to be shut down during the lockdown, and many of them couldn’t weather the devastating effects of the prolonged closure and have gone out of business for good. Many customers are uninformed about the operation statuses of these businesses. Therefore, as things are slowly improving, you should reach out to your past customers and new customers through a simple email marketing campaign to inform them that you are back and ready to serve them again.
By building relationships again and contacting previous customers, it’s possible to entice them back.
6. Communicating Covid-19 Safety Measures
Once business operation resumes, share relevant information on safety procedures that your business is taking to protect the employees and customers. Many of these measures can be self-imposed or executed following government-mandated health and safety guidelines.
If you are in a retail business, make sure to disinfect your premises. You might have to train employees to properly clean and sanitize merchandise and high-touch areas while they’re working to prevent the spread of the disease.
7. Crisis Proof Your Business
While you might think this Covid-19 pandemic is a once-in-a-lifetime event, the truth is we are living in a period of profound instability, any emergency can spring up of nowhere to disrupt your business at any time. Hence, it’s crucial to make good use of what you have learned during the current pandemic to prepare for the next Black Swan event and protect your business from unforeseen shocks.
For example, you might look into buffing up your capital reserve to cater for future or unpredictable expenses or losses of your business. You may also choose to prioritise paying down your business’ debt, streamline operation, or cutting down non-essential spending to keep your budget in check.
The main lesson all businesses can draw from this pandemic is being adaptable. Adaptability is now a compulsory business competency, and an accelerated pace of change has become normal. The more flexible your business is, the quicker your can overcome unexpected challenges.
Last but not least, always have a Plan B up your sleeve for a worst-case scenario so you can improve your business’s odds of surviving and hopefully thriving.
Want to know if you’re financially eligible for a business loan? Talk to our advisor to find out more.
Avex Venture Capital is a licensed money lender in Malaysia under the purview of the Ministry of Housing and Local Government and governed through Money Lenders Act 1951 and Money Lenders Act (Amended) 2003. We provide a variety of personal, mortgage and business loans that are tailored to meet your specific needs.