The fast-spreading new strains of coronavirus is reminding all economies just how much they rely on each other for business as human activity across many countries shut down while authorities continue to contain the outbreak.
All countries have witnessed a downturn in the hospitality, tourism, aviation, luxury retail and construction sectors. A recent poll revealed that one in five business owners believe climate change and natural disasters poses a threat to their business, but sadly a staggering 77% of them do not have a natural disaster plan in place. The ripple effect of this could mean that as many as 40% of small businesses will never reopen their doors following major natural disasters such as this.
With such significant economic impact, in time of downturn or major natural calamities, businesses need to have a complete picture in retrospect and understand the worth of being better prepared for future crisis.
Always have a Business Continuity Plan in place
With or without catastrophes, all businesses whether big or small need to have a Business Continuity Plan in place outlining how a business will continue to operate during an unplanned disruption in service. This document should be considered as a mandatory tool to help businesses adapt, respond to risks and be prepared for all kinds of eventualities.
The grim reality is that 49% of startups fail because they are unable to mitigate the effects of a hard market or unresponsiveness that they did not predict. According to industry experts, on average, an infrastructure failure and a critical application failure can cost up to 1 million per hour. This highlights the need for businesses to develop a holistic business continuity plan that can keep the business up and running, protect data, safeguard the brand and retain customers while minimizing the downtime and loss to the business.
With business continuity being a broad and complicated venture, the involvement of a business mentor at this stage is a good idea. You can’t know it all yourself. The realities of business, technology, finance, operations, logistics, marketing, human resources, and the rest of it are simply more complicated and rapidly shifting than anybody can keep up with. With broad background and experience a mentor can help you identify your strengths and can assist with the development of a business continuity plan that touch bases all the major areas such as continuity of business operations, uptime of all related information technology hardware and software and crisis management plan to avoid major impacts during unforeseen incidents.
Plan for contingency by reserving capital out of your regular cash inflows
Big businesses have collapsed not because they don’t make profits, but because their business owners considered themselves immune to risks – be it by over leveraging their profits by debts, or underestimating the potential of any disaster or threats and its implications on their business needs. The purpose of this reserve is to act as a cushion against surprises and hence establishing a contingency reserve is a part of risk management. For most businesses, the percentage of a contingency reserve should be approximately 3 to 10% based on the type of the project, commonly understood as mixed flat rate contingency.
Upskill yourself to maintain the focus and get an outside perspective
During economic downturns, when business decisions need to be sharper and smarter than ever before, it is imperative that entrepreneurs look at upskilling themselves during such tough situations.
Business owners can upskill by identifying areas in business where they struggle the most and by engaging a mentor to guide through those obstacles. We all know this, it’s lovely at the top! Don’t deal with your issues by yourself, involve consultant and move fast.
And with the upcoming trends in technology, it is absolutely convenient to upskill digitally or interact with global mentors overcoming the geographical boundaries and time zone differences.
Don’t wait till it hits your business or your country – take cues from global happenings and start tweaking your business model. Events are unfolding with astounding speed. Only a few weeks ago, it looked like the epidemic was mostly confined to China and now it has been declared as a pandemic by WHO.
In the connected world, everybody has direct access to many sources of information so it’s good to consult multiple sources. Businesses need to work on employing an iterative, empirical approach to what’s going on and what could work for their business operations while constantly reframing their understanding of what’s happening.
Prepare for a digital future
Disruptive technology is changing the way we work and the nature of our workplaces. If digital technology is fully integrated into a company’s strategy, it can benefit all employees and help secure their future.
While we talk about digital readiness, it is not only to have the technology in place but also a “digital ready culture” with role models who exemplify the ‘digital culture’ for the transformation to be successful. For a company to call itself digitally ready, they should rate themselves on seven core tenets i.e. innovative ideas and out-of-the-box concepts, data-based action, conscious collaboration, external partner flow, digital as baseline, versatility and customer first approach.
75% of CFOs estimate that their Organization is missing out on revenue opportunities by failing to adequately support digital business transformation. The e-commerce sector has proved to be the most digital ready during the outbreak of Coronavirus and hence it has witnessed an increase of 101.5% in online sales as compared to the same period in the previous year.
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