Covid-19 Economic impact

March 3, 2020News

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Covid-19 Economic impact

March 3, 2020 News

3 things to do to ensure your business steer through the pandemic and come out on top.

“In the face of a global crisis, well-prepared businesses can help protect their workers and their bottom lines” culled from Strategy+Business

The content of most emails relating to the COVID-19 / Coronavirus pandemic have been pretty much identical. Business organizations have been increasing awareness on hygiene, implementing work-at-home policies and so on

This post intends to provide a structured framework for businesses to reduce the economic shocks of the virus on achieving their business targets for the year. Everyone organization is unique, but we hope that this article provides a guide to help your team at least better-frame their thoughts on how to tackle the high level of uncertainty brought on by the pandemic.

Who needs a COVID-19 strategy?

I think that people have realized that the virus is going to have a negative impact on the vast majority of organizations. The coronavirus pandemic is devastating the global economy. Oil prices have dropped sharply, air travel is demand has declined, sports leagues and big events are being canceled, countries are battling to keep the virus outside their borders by putting up travel restrictions, and public health officials and hospitals are gearing up for the worst.

Developing your own COVID-19 strategy is pretty similar to how you would any other strategy. In other words, a simple Strategy Model that includes concise Objectives (outcomes) that you want to achieve, supported by the strategic Initiatives (actions) you’ll be implementing to get there and the KPIs (measures) that you’re trying to positively impact.

According to Statistica.com global travel business wil loose about $800bn due to covid 19

There will also be the need to develop and implement a performance monitoring system that tracks your strategy execution. If you do not have this, no problem. H. Pierson has numerous resources to get you started on effective execution & monitoring of your organizational strategy.

 

Critical areas to consider in the development of your COVID-19 Plan

Your COVID- 19 strategy plan should be driven and centered around the following

  • Restructuring your business
  • Re-positioning your product
  • Redesigning your marketing & sales funnels

Let’s dive in deeper!

 

Restructuring your business

The economic impacts of COVID-19 are most likely going to be negative to your business. With many parts of the world including Nigeria exploring a lockdown to contain the Coronavirus pandemic, the rising cost of the outbreak for businesses and the global economy is coming closer home. Sales will reduce in tandem with market confidence.

Thus, there is need to ensure that your cost structure is positioned appropriately to offset this. This basically speaks to the survival and sustainability of your business in the short term, and there will be tough decisions to be taken to prepare your business to weather this storm. You therefore must take the requisite steps to effectively reduce where needed and do so straight away.

 

See below a sample objective, initiative and KPI that can be implemented by your business:

 

OBJECTIVE INITIATIVE KPI
Restructure workforce to ensure commensuration with current business demand Conduct audits of all staff productivity and make adjustments to employee headcount Reduce overall wage costs by 15%

 

 

Note that reducing head-count cannot occur without causing some discomfort. However, your ability to quickly take decisive steps about people who either aren’t pulling their weight, or who won’t be able to pull their weight in the short term will actually protect the business in the medium to long term. The best time is now!!!

Restructuring your business does not have to be about cutting down on your staff cost alone, there are other ways to minimize costs without the risks of losing out on opportunities to grow.

You also want to start thinking about minimizing your cash flow outgoings over the next few months, even if in the long term that means spending more money. When it comes to survival cash is usually king!

Finally, with regards to restructuring, endeavor to minimize the amount of account receivables owed to you, taking into consideration that you won’t be the only one trying to reduce costs, your customers might be too.

 

Re-positioning your product/service

In the previous point, we emphasized reduction of costs to a minimum. Inevitably, that means reducing expenditure on anything that could be considered a luxury or even a non-necessity. The reverse-side of taking that advice, is that your product or service could fall into that luxury or non-necessity category, unless you do something about it.

This will of course apply different to different businesses. Toilet-paper and hand sanitizer companies are sitting pretty at the moment as you’ve no-doubt read in the news. Whereas fine-dining restaurants, hotels, airline and travel companies have seen a noticeable drop in demand and revenue.

The question therefore is, where does your product or service fall on the necessity to luxury scale?

 

Here are some action steps that you can implement:

  • Reassess the current perception of your product/service and categorize based on necessity to luxury
  • Determine the products that can be re-positioned as ‘necessity’
  • Develop a revised marketing strategy for the re-positioned product/service
  • Implement revised marketing across your key channels

 

Be careful not to just focus on new customers though, you’ve got existing customers that you also need to persuade of your value in these difficult times:

You’re going to have to go above and beyond in ensuring that customers remain engaged with your product / service. This may mean accepting lower margins and giving away features or extras that would normally be reserved for higher paying customers.

 

Redesign your marketing and sales funnels

It is expected that due to the current business environment induced by the COVID- 19 virus, some businesses will fail, some will survive but may never be the same. Others will survive, consolidate and then flourish – perhaps even stronger than they did before.

One of the biggest changes that may remain a norm, is the accelerated shift to digital interactions that and that may likely continue even after the virus situation abates. Therefore, the way that future buyers and customers interact with your business will never be the same again.

For some organizations, this may not a major shift. However, the shock of this change to faceless interaction will be massive. Physical commerce as always comes to mind, but this change will also affect entertainment (streaming services up, cinemas down), consulting services (old-school accountants have started embracing Zoom).

 

Are you prepared for this change? Here are some steps you might want to consider:

 

  • Identify and benchmark best-practices in digital marketing for your industry marketing
  • Develop digital sales & marketing strategy that reflects current trends
  • Rapidly implement an accelerated adoption of the digital marketing strategy solutions to your business

Your organization may be good at digital marketing, but remember that your competitors will also stepping up massively in this regard too. costs, Digital marketing is definitely an area where additional investment is almost certainly prudent. If in doubt, start by hiring an expert in this space, even in a temporary capacity to help you get started.

 

Think outside the box as regards selling your products/services, and accept that your customers may not be willing / able to churn out huge amount of money upfront. The ability to rapidly adapt your business model may be the difference between survival, failure or success in the next 6 months.

 

Stay positive & resolute

 

Need to bridge the gap between your strategy development & execution? Book a time with someone from our team!


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