2020 is the year, social distancing the norm and survival the strategy. Startups and small businesses have been struggling with a disrupted supply chain and distribution channels, and that too, like never before. Add to that reduced consumer demand, frequent lockdowns, lack of stability in the economy, all of them culminating into a bleak future ahead. This article talks about the main challenges that such companies may face in this period of uncertainty, along with ways to mitigate them to successfully see this through.
Tough times call for tough measures, and there can be no better a way to test the leadership acumen, than in the period of the ongoing pandemic. It is the decisions that they make now which would establish their image and reputation as a true leader. Dealing with employees become extremely important in this uncertain phase- an empathetic attitude towards problems can go a long way in establishing and deepening the bond of trust between management and employees. As Mary Barra(CEO, General Motors) famously said, “Your employees come first. And if you treat your employees right, guess what? Your customers come back, and that makes your shareholders happy. Start with employees and the rest follows from that.”
Working Capital Management
It cannot be stressed enough the importance of managing the company’s working capital effectively. While effective management can help in completing the operating cycle of businesses, inefficient handling can sound the death knell by forcing the cash-strapped team to insolvency. At a time when uncertainty over restrictions looms large, companies need to keep their working capital ready for emergencies. Reducing current liabilities by cutting down on payables can be an option, if used wisely.
Pivoting Business Models
The pandemic has rendered huge losses for a large number of business sectors. Several startups and businesses in these areas are pivoting their business models to alter the way they deliver value to their customers. One of them is by moving their businesses online. Retaining current customers through loyalty programs, and simultaneously capturing new ones using remodeled value propositions through digital channels is quickly becoming the ‘new normal’.
Nevertheless, while we focus on a tight-budget business survival strategy for now, here’s to hoping that this too shall pass, and tomorrow will be better than today...