To remain a viable business beyond COVID-19 you need to be smart, responsive, competent and a seriously committed entrepreneur. This event will redefine businesses. The period that follows COVID-19 will sort “the men from the boys”. Post COVID-19 the landscape could become more competitive.
The US government is injecting several trillion dollars to soften the blow; with the numerous government sops, we may feel a lesser impact at first, followed by consequences of reality, then will get to a gradual tapering of COVID-19 and its impact. The critical help the government is providing is short-term, and it offers businesses a small window of opportunity to mitigate the impact of the carnage. We recommend against sitting back. The adage that “fast one is the first one, the last one is the lost one” may apply now.
Entrepreneurs are worried with battling the fallout over a longer period and want to ensure survival of their businesses. This is about saving and futurizing our business practices and empowering our businesses. Small businesses need effective guidance now, not pretentious rants. We will distil the essence of our 30+ years of business and entrepreneurial experience and lay it out in stark words.
What lessons can be gleaned from the COVID-19 pandemic?
Entrepreneurs cannot afford to bury their heads in the sand. The collective global stupor was astounding. We could have extrapolated the likely impact from how the COVID-19 pandemic was evolving in China in Jan 2020 and built up our defenses, but we failed.
What entrepreneurs are contemplating now is “what will it take for my business to survive this and then thrive”. Every business is different and there is no one-size-fit-all answer. The impact of COIVD-19 is not going away anytime soon, the lingering effects could with us for 2-years, or more. There is no going back to remedy the brunt that is underway, but there are things we can incorporate in our businesses that have proven to help businesses succeed.
We reiterate – it is not going be business as usual and the pain will get real. Businesses that wish to lower their vulnerabilities need emulate traits of their successful peers. With government help on the table, the smarter and faster ones amongst us can pivot from a disadvantaged position to become an advantaged business. The choices we make now will determine where our businesses are in a year from now.
The ‘components’ we outline below are not essentially tedious or financially challenging to incorporate, and we see them as things that every progressive business must have.
If you need interim help navigating the options to chart your path, get a mentor, hire a business advisor, etc. A good professional can help you see through the fog.
1. A Sound Business Plan
This may be the only open time you have for the year. Utilize it to reflect upon what your business is.
- On Dec 31, 2019, was your business where you thought it should be? What were your missteps?
- What has been working for your business, and what has not?
- What are your strengths and weaknesses? Do you understand the opportunities and threats that are out there?
- Do you have a well-defined growth strategy?
- Do you have an experienced team, and funds or a funding strategy to grow to the next level?
Take your answers to the questions above and revisit your original business plan to determine if you are on or off course. Nonetheless, update your business plan and don’t let it gather dust again. Make it a living document – be sure to periodically revise it, update it, tune it!
2. Commitment to Clients
Commitment to clients does not entail you bending over backwards, it is providing them with features that are valuable to them, for their clients. It makes you an indispensable vendor. Your clients likely want to focus their energies on serving their clients, therefore whatever value addition you provide will help you become a core vendor.
Think how you can make your products and services compelling by adding value that your competitors cannot easily replicate. Do not sell on price alone, highlight the features. This could be as simple as offering a longer warranty, offer to customize packaging for them, offer to drop-ship their orders, provide technical support to their buyers, etc. If you are in the retail trade, offer quick shipping, longer warranties, outstanding customer support, a no-nonsense return policy, etc., will win you accolades.
- Are you a core vendor to your clients? If not, what will it take to become one?
- Are you providing the best possible products and services to your clients? Are you able to take those a step ahead?
- Do you understand your larger competitors? What is their Unique Selling Proposition (USP)?
- Are you aware of new products or services your clients are looking to introduce? Do you believe you will be offered the opportunity to vend those? If not, why?
- Are your clients aware of new products or services you are planning to bring on? If not, why?
- Are your able to keep your clients because you offer the cheapest product/service? If so, that is a flaw which should be remedied.
NOTE – To ascertain constancy of your growing business, you should not generate much of your revenues from one or two clients for an extended period. We put the ideal level of revenues from one client at 5% (a spike of up to 20% is fine, for short periods) – this will insulate your business from substantial drops should your client face challenges. Thus, as your business from one client grows beyond 5%, invest efforts in making your overall business grow proportionately.
3. A Competent Team
Entrepreneurs are driven by their gut, but to grow their businesses should be process driven. To grow a business beyond a point, you need to assemble a winning team. It is okay to include family and friends, but you need to be sure they are appropriate for the task. If you are looking for someone to help with social media interactions with your clients, you can include a dynamic youngster in the family (train them first). If you need a sales manager to open doors to Global 2000 businesses, get the best out there. Do not “make-do” because once a prospective client has sidelined you, you may not get a second chance.
Make sure the people you induct have the right kind of attitude, are qualified for the task and make a great fit. Define the benchmarks for each role then communicate them clearly and adhere to the Standard Operating Procedures (SOPs). It’s got to be a winning team – all excuses for not having one are invalid.
4. Dependable Vendors
Just like the efforts you involve in building a solid base of clients, you must be diligent in building a dependable base of vendors.
- Are you dependent on one vendor for more than 20% of your products or services? If so, you need include more vendors. This will ensure redundancy if one vendor get marginalized. You will need great vendors to grow your business.
- If your product or service can be acquired from more than one geography, do so. It will help you expand your sales footprint too.
Once you have implemented the above measures, you will likely be able to negotiate better pricing, have access to a wider selection of products and services, etc.
Funding is one of the more critical challenges for many entrepreneurs, and often raising funds is more difficult because their businesses are not as process oriented as investors and lenders like to see. However, most entrepreneurs with good personal credit scores can get loans from banks, credit unions, SBA, etc. Additional operational funding can also be provided by banks for factoring companies against your paid-up inventory and/or receivables. Some businesses may qualify for grants from government and NGO’s.
- To ensure seamless growth, the management must think 6 to 12-months ahead of funding requirements
- Companies with compelling ideas, a well-articulated business plan and a competent team can qualify for Seed funding, Angel funding, Venture funding, Strategic funding, etc.
The base rule is that people invest in people first, then processes and finally the product / service offerings of your business. The emphasis should be on making your business more than just about you. Build systems and processes, sharpen the execution skills – these make investors feel their money is in a good place. Banks will want to see how you have been growing your business and managing your finances. Seed investors, Angels and VC’s will want to see your team, strategy, trajectory, etc.
If you are a new business, start building a credit history for your business. We will discuss more specifics on how to prepare your business for funding in future posts.
Again, diversification of products and services may not be appropriate for every business, but many businesses miss out on generating additional revenue by offering complementary products or services. Like we stated in another post – if you own an apparel business, add a small selection of work clothes – in a different section of your store or do it online; if you own a work-wear business, introduce a selection of safety gear, etc.
- Is product or service diversification appropriate for your business? If so, do it methodically. Do not jump into it based on your gut feeling or your neighbors’ opinion – research your competitors, speak with a few clients, run a test, offer it to a small set of clients then roll it out for all.
- If you are a younger business, we recommend you do not diversify too far out of your core product or service. A complementary product or service allows for deepening your reach with existing clients without strenuous marketing initiative. This will also open doors to potential new clients.
Business technology is something that often is not on active radar of entrepreneurs. However, lack of appropriate technology can be one silent and an ultimate business killer. Business technology today has moved beyond word processors and spreadsheets – it encompasses your accounting, communications, websites and social media. In our experience, many entrepreneurs postpone employing technology because of a perception that it is cost-intensive and difficult to manage. Untrue on both grounds!
Granted, managing so many pieces technology can get overwhelming for an entrepreneur, but most of it does not need day-to-day managing. Those components that do can be outsourced cost-effectively.
We recommend a technology roadmap that include
Your website is the only window where clients and potential clients can see what you offer and what you are made of. Showcase your full range of products and services as effectively as possible. It must also provide a clear picture of what your business is, your commitment to clients, etc.
We strongly recommend against subscribing to free websites provided by domain name sellers, because when you change the host you may find you don’t own anything. Invest in one of your own. Also, you may not always have access to the user data you generate.
b) Social Media
Businesses today need to leverage social media tools such as LinkedIn, Facebook, Instagram, Pinterest, Snapchat, etc., to interact with existing clients and win new business prospects. If you do not have the time or the understanding to manage these, you can hire youngsters in the family or from the church. There are also thousands of small service providers that specialize in Social Media Marketing for affordable fees. Whoever you work with, be sure you have clearly defined Standard Operating Procedures (SOPs).
c) Cloud Storage
Cloud storage for small businesses is as simple as buying a subscription for Microsoft Office 365. This will offer copies of full suite of Microsoft Office, (Word, Excel, PowerPoint, Outlook, etc.) to all your employees. With this subscription all the information you and your associates/employees generate will be stored on Microsoft cloud servers, allowing you to access all your information from anywhere in the world.
d) Cloud Accounting
Entrepreneurs are appalled at maintaining their ‘books’. Today we have solutions like QuickBooks Online that have really simplified the bookkeeping and provide mobile apps so you can add and access all financial information while on the move.
e) Communications & Virtual PBX
Virtual access to your company’s email communications can be addressed by Microsoft Office 365 subscription, which includes Skype which some may use to communicate internally and for external collaboration. Like your emails, today we have hundreds of providers offering full-fledged hosted PBX phone systems. Virtual PBX’s help take dependence off a fixed, physical location. These are the tools of the future and are inexpensive to subscribe to. The Virtual PBX’s have become so good that a service which starts at about $ 10 a month can rival in features with a legacy PBX phone system that can cost about $ 30,000! Additionally, we personally like the idea of employing highly customer-centric capabilities like live chat and click to call.
Some businesses may require specialized applications. Example – a company that provides air conditioning maintenance services needs to record the hours a technician spends at a client’s location. Most such software are also available in a hosted environment, often with integrations into leading accounting packages so billing can be generated at a click of a button.
Things were going so well for so many businesses and until we hit the COVID-19 brick wall. Now many of us are lost on how to fight back. Whatever the consequence of our businesses, many entrepreneurs will come flooding back. The important thing is to learn from this is to build upon your strengths and eliminate the weaknesses. Entrepreneurs have always led the way, and that is unlikely to change.
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