The first months of 2020 have already proven to be an uphill task, with tragedy after tragedy. These past few months have been characterized by the deadly pandemic known as Covid-19, which has affected a lot of normal operations. Issues of unemployment and market crashes have risen as a result of this pandemic, with many people being retrenched and businesses failing, and this has taken a toll on the national and consequently the international economy at large. Company leaders continue to face existential pressure in maintaining productivity levels, however many problems to do with extra customer demand and rising cost pressures come up. As it is their duty to guide their work force during this time, they have to find a way to thrive even post-crisis.
In order to thrive during this hard time, plans to handle both short-term cash management and resiliency issues ought to be put in place. In this article we will provide you with a few tit bits of how to manage your business through the chaos
This involves the following:
Only focus on what is needed in real time demand. Tying up cash with inventory will inconvenience your cash flow, especially during this time.
Constantly check up on receivables and ensure your customers pay on time. Delayed payments end up replacing debt to creditors with debt to vendors and it doesn’t give your business more cash, as assumed.
Most business may have an unused building, or an ignored storage area piled with old and ignored documents or equipment. If it doesn’t serve a purpose, sell it out.
Ensure you have put plans in place to rightsized SG&A, based on different business probabilities in order to avoid regret and “I wish I would have acted sooner”. For instance, extra service providers can be purged, downsized or made in-house to keep the important employees.
Margin development is characterized by low effort-high return model. This can be done by focusing on key areas of leverage, say by implementing a maximum if three initiatives.
Dropping prices during this time will make your customers assume that you have been overcharging them in the past. Alternatively, you may look for areas where the supply and demand can allow you to raise the prices. For example, a price rise of 1% would produce a 4% increment in operating profit.
This is the time to rest and clarify to your employees about the Strategic priorities in line with the new normal. This is to prevent confusion in the business. The goal must be the same throughout the team.
Making a review of the entire customer base will allow you to identify probable pricing opportunities, with regards to whether the pricing should be increased of remain stagnant.
The smaller customers, known as ‘Long tail, represent little revenue individual but a significant amount collectively.
Involving suppliers that are already close to home is a route more procurement employees are gravitating to. Including new suppliers is tedious and lengthy but it can reduce the risk of disruption to your business. Also, involving your current suppliers in the review encourages them to maintain the best deals and services for you.
Managing your business in the new normal is definitely challenging, but this is a challenge worth conquering. Implementing these survival plans will be able to strengthen your short-term position in the market. This will solely depend on your team, both customers and employees. Develop key personnel and build a winning culture.