It was a normal Friday afternoon. I did my daily reading, my workout, and planning session with my business partner.
Our conversation led us to a discussion about the current global situation. We talked about our further steps as business owners, and we exchanged views on how leaders (the business owners) can respond to COVID-19 effectively.
We all know that this time is challenging and odd for almost everyone, especially to the business owners. The pandemic’s impacts on health and the economy still threaten and hurt us, the businesses, the governments, and the economies on so many levels. However, leaders must realize what should be the priority. It is survival. Making profits should be considered somewhere in the middle or at the bottom of the list.
Mandated shutdowns and quarantines will most likely result in revenue loss. As leaders, it is our best choice to widen our perspective and see the losses and setbacks as part of our long-term journey. Losses should be and can be recovered by implementing financial strategies that I want to discuss in this article.
Hence, we cannot focus on the negatives that this pandemic has caused our business. Instead, we regard this as another challenge that we can win over.
Human capital is one of the fundamental resources we have. We all recognize that. Our employees should always be kept in mind and taken care of. They, too, need to be protected as well as their families from the fatal virus going around. We need to help them be less vulnerable as far as their jobs are concerned. Similarly, we have to remember they also have families to feed during the quarantine.
Ideally, we want to provide everything for them, but let’s face it. Not all of us can afford it. So, what do we do? Here are my suggestions:
- Avail of the support provided by the government. The National Government, through the Social Security System (SSS), has laid out the Small Business Wage Subsidy (SBWS) program to aid the affected employees of small businesses. This PHP5,000 to PHP8,000 (depending on the region of work) two-month financial assistance is dedicated to supporting small businesses to be able to retain their employees during the quarantine period. Employers are responsible for applying for this program for the benefit of your employees. Learn more about it here.
- Strategize pay-outs. While some of our clients can still provide the full salary of their people, some cannot afford it. Alternatively, we can release the earned 13th-month pay in advance, so they can still receive something in these trying times.
- Continue and encourage teamwork and communication. With the modern technologies available, it is possible to still get in touch with your people. Collaboration amongst the employees is made doable online. Apps like Zoom and Skype are great for online meetings and training. Discord is also a social platform (originally for gamers) that is highly recommended for group chats due to its reliability and excellent features.
- Promote learning. Encourage your people to acquire something new that can help to improve their jobs when they go back to work. You can either sponsor them for courses available online or recommend the free ones. In case you don’t know yet, sending your employees to Harvard is now absolutely free. You may also check Coursera for online courses in many areas your employees might benefit from without paying anything.
We can still be productive despite the situation. Business operations need only some rethinking and reinventing to stay in action during the quarantine. These are some things you can explore to maximize slack seasons and groom your business for better times.
- Introduce new products or service lines. From its population of 109.58 million, the Philippines has approximately 57.9 million social media users. That being said, social media platforms such as Facebook, Instagram, Youtube, and Twitter are the best places to launch a new product or service line. Be creative. Show that you care. Filipinos love that! Contests in social media have also been proven to be effective in promoting awareness. Want to know more about it? Check this.
- Be creative in boosting sales. In one online forum, they mentioned a spa that sends a spa kit to their customers along with a video on how to use it. That way, customers can have the same experience at home. Innovation and creativity at its best!
- Leverage employees’ creativity for marketing. Some companies asked their employees during quarantines to make vlogs to promote their products. Videos with the highest number of views and likes will receive some rewards. They did a low-cost marketing strategy there, didn’t they?
Finance and Liquidity
The COVID-19 outbreak has caused a significant cash flow challenge to almost every company, especially the small and mid-sized ones. It is best to get a good analysis of the liquidity situation. As an accountant and business consultant, I recommend some of these strategies to cope with the financial struggle:
- Minimize receivables. Be proactive enough to talk with your customers and request their payments should they be already capable of paying you. In a strange time like this, anyone would understand your situation.
- Maximize payables. Other companies are armed enough to survive financially, even during difficult times. Ask them if you can delay the payments and negotiate for reasonable payment terms or periods.
- Negotiate for a variable rent. Fixed costs, such as rental fees comprise a large part of your costs (this is particularly true in the food and beverage industry). It is best to negotiate and request for payment schemes like paying a variable rent based on the revenue you have generated instead of the fixed rentals.
- Emergency fund. The cash reserve that you’ve built during the sunny days will aid you in covering your business’ monthly fixed costs in trying times like this. For those who haven’t had the chance to build their cash reserve, it would be best to start building one after this quarantine period. As a rule of thumb, your business should have at least six months worth of expenses in your cash reserve.
To summarize, the strategies you can consider to beat the odds of the pandemic is to prioritize your people, rethink and reinvent the business operations, and study your finance and liquidity.
And on top of those, it’s about resilience. During our conversation, my business partner struck me with this meaningful reflection:
He said, Jonathan, imagine that you are a civil engineer, and I am your boss. I called you in my office because I want a road built from a certain point A to point B. But between those points, there is a forest, a swamp, and a mountain – the obstacles in making the project happen.
Your competence as a civil engineer will be measured by how you get the road built. You can go over the obstacles, under or through them. If the mountain is made of granite and particularly difficult to bolt through, and if the forest is so thick, you might consider doubling your fee. However, apart from that, it does not affect your emotions.
Your life as a leader is like that. You are a civil engineer. The forest, swamp, and mountain are situations like the pandemic, setbacks, and toxic people. Nonetheless, you don’t get furious about them. You continue figuring out how you are going to get your road constructed despite them.