All crises start in different ways, for different reasons. But the consequences are the same for everyone. It all starts with the fact that people give in to panic, stop going to shops, making purchases, i.e. make economic transactions. As a result, the company’s revenue falls, and accordingly, the director begins to cut costs and reduces wages. Despite this, the profit of the enterprise falls. This happens everywhere. The economy is slowing down. The crisis is coming.
Financial analysts predict the coronavirus crisis to lead the top of all recent economic downturns. In fact, every business has a separate scenario: some businesses will go to the bottom, others will soar so that you can’t catch up.
4 lifebuoys that keep businesses afloat during a crisis
If you want to close your business faster, then cut off marketing support. Seriously, if you turn off ads, it won’t immediately affect sales, because the effect is delayed. In a month or two, you will feel that the traffic has dropped, and in three months the flow of applications will dry up altogether. How should customers learn about you, because thousands of companies, even regular customers can forget you in a crisis?
To optimise your promotion channels, transfer your advertising campaign from offline to online, as well-known brands have done. Get involved in the development of social networks, attract bloggers, pump your site and activate SEO. For a successful result, you need to spend at least 7% of revenue on marketing and advertising, and all 10% for guaranteed growth.
Loyal customers are everything. They can be re-sold and offered additional products and services. Monitor and analyse the customer base, segment it into subgroups by areas and requests. Separate fresh customers who haven’t ordered yet but are interested in the product. This is the main group of potential buyers to whom it is worth directing work.
The biggest mistake of owners and leaders is to cut staff salaries or impose severe sanctions during the crisis. It is human resources that will take you out of stagnation if you motivate your employees correctly. Do not threaten them with fines and dismissals. Offer rewards for overwork, rewards for ideas to get out of stagnation. Human psychology is designed in such a way that he strives to conform when he is encouraged and believed in him.
While other entrepreneurs panic and fire employees, take on the really important task of training and developing your fighters. Cadres are everything. Competent employees will make the company mobile and strong. Arrange weekly meetings, collect feedback from the team to optimise work.
Entrepreneurs rush to cut costs, but there are pitfalls here because some expenses can indeed be eliminated, while others, as you already know, are better even increased.
The expenses are divided into strategic ones, which are responsible for the growth of sales, including marketing and advertising, and non-strategic ones. This includes related expenses: rent of premises, equipment, purchase of raw materials and supplies.
If you have four strategic directions for development, you can now safely cut costs.
Why do you need an office during quarantine? Return the premises to the landlord and feel free to send employees to a remote location, everyone you can. After the crisis, it is easy to rent a new office, especially since a lot of excellent working space will be freed up.
Build the backbone of the team and fire unnecessary employees who are of no use. Outsource positions that are not needed on a full-time basis, such as HR, accountants, lawyers and designers. Some functions can be combined and assigned to one specialist for a surcharge, and some can be distributed among the remaining employees.
Previously, you held noisy expensive corporate parties, sent employees on long business trips, ordered a lot of corporate souvenirs and could do much more that does not affect the strategic development of the company. These unnecessary expenses can and should be abandoned in favour of digital marketing. This is where the real prospects for the development of the company are.
Try to free up money to pay off some of your debts and not pay interest and penalties. For instance:
-talk to buyers about prepayments or shorter pay periods; discuss with suppliers the possibility of deferrals or discounts; analyse accounts receivable and start collecting them;
-take inventory and sell inventory that you don’t need.
-use stable liabilities – wage arrears, reserves for future payments and invest them in assets that can bring profit. Be careful. Long delays in wages will lead to reduced working capacity and problems with labour inspection.
-make sure to find good debt collection companies.
There are many ways to cut costs, analyse for yourself what suits you and will give the best effect.
How to turn the crisis in your favour
Monitor the market constantly and keep an eye on your competitors. Someone is out of order, take their clients for yourself. Be tough and aggressive, get in touch with the potential audience first, don’t wait for the client to find you. Negotiate discounts and concessions with suppliers, contractors and landlords. Determine what actions are slowing you down and feel free to get rid of them, direct all your efforts into the strategic development of the company. The main problem with coronavirus is falling income and saving expenses. To increase revenue, you need to change the business model: for a retail store to open an online store with delivery, taxi to deal not only with the delivery of people, but also goods, groceries and parcels, and so on. Increasing income requires a highly individual approach. Do not whine and do not hesitate, and then the crisis will become a springboard to a bright future.
Perhaps for many, the pandemic will become a new round in business development – it will allow them to master new ways of interacting with customers, enter new niches or digitalise existing processes. In any case, business activities in a pandemic require flexibility in terms of adaptation, external support, bold decisions by entrepreneurs and careful analysis of business processes with a view to further optimisation.