BUSINESS SURVIVAL AFTER CORONA LOCKDOWN
Business Life after Lock down is not going to be easy ride for anyone, except for few sectors such as Pharma, Software. The working capital management is going to be a big concern for every company , irrespective of scale of the company. Don't look as we lost two months in our business cycle; Instead, Do approach that you only have 10 months in this financial year - Change your approach. Following would be key points that need to be addressed for
1. SURVIVAL IS KEY
Be any crisis, the Survival should be the objective of every business. As a Entrepreneur, Do chalk out a Business Continuity Plan to survive the crisis. Don't worry too much about the downfall in the growth & pressure clouds on cash flow. Even Majors are going to undergo this. Be Open & Do all the possibilities to survive.
2. CUSTOMER ENGAGEMENT - 80:20 ANALYSIS
Do apply 80:20 analysis to last three year sales data and gather the customers through whom we received 80% of business in the last three years. We need to start our engagement with these key customers, as their survival is going to be the asset for your own survival. Don't talk too much about business at this pandemic situation; Get to know their well being and be in touch. After lock down, we can talk business to them and do the needful for their survival as much as we can.
3. CONVERSE WITH YOUR TEAM & DO MOTIVATE
More than you, the team would be more worried on their survival. Do start conversing with your team, through e-mail (or) con-call and convey your plans for revival of business, their roles & responsibilities, & how we going to sail through this crisis. Let them visualize the problem we are going to face and how we are going to handle the same.
"When going gets tough, Tough gets going". Team should understand this and should not be demotivated on negative growth, delayed salary, cash flow crunch, fall of many other business.
4. SALARY CUTS, NO APPRAISAL & VARIABLE PAY
Do clearly communicate to your team, the appraisal for current year would be delayed abnormally and may be even happen along with the next year. And do suspend the Variable pay for Interim period. The survival is the key and not the growth.
Do categorize your employees to various categories based on their pay scale. If there is shortage in cash flow, then determine the salary cuts for each employee cadres and reduce the burden; Do avoid salary cut for people earning less than 25k on humanitarian grounds. Also, plan to disburse salary in two installments and so burden would be scattered over the month. The management core team should be ready to lose their salary for few months to ensure the survival of the business. They can draw profits as dividend or Incentive in future after passing through this crisis.
5. BE READY TO TAKE BOLD DECISION
Be ready for taking bold decisions. This is not normal situation and you may need to take many tough calls. Do close the business Division with negative cash flow, even before lock down. Closing the prospective sales contracts with heavy discounts is not crime in this situation. The delayed decision would cost you heavily in this time.
6. ZERO BUDGETING
We always approach budgeting for expenses with incremental budgeting (do budgeting for various expenses based on previous year expense statement). Now, we need to approach through Zero Budgeting. It means you need to start from first rupee. We need to substantiate the need for each and every expenses. And have to take cautious view on avoiding expenses as much as possible. Being Lean is not mean.
Do go through all fixed expenses and try to negotiate all expenses such as Rent. Maintenance, Software Subscriptions, Outsourced contracts etc.,
7. NO NEW LINE OF BUSINESS OR EXPANSION UNLESS WARRANTED
Do keep away all the new business projects or expansion plans for short period. We may take recall for action after observing the after-effects on your own business.
8. FUTURE OF WORK
With growing importance of new trends like Digital, Block Chain Technology, Artificial Intelligence & Machine Learning, We need to analyze our own business and re-align to newer trends to sustain in the future. Also, Do Start working on business plan (to be executed after one year) for adding newer division to diversify the business risk. It always said that good business ideas comes during the time of crisis.
Analyze to implements Robotics BOTS in your business process and so you can cut down your cost and increase efficiency of the employees. The repetitive task should go under BOTS - That's the order of the day. We can all witness the efficacy of CHAT BOTS in the customer service handling of Amazon, Swiggy, & Facebook. They have significantly reduced the customer handling time as they moved out from IVR.
9. SAY NO TO NEW BORROWINGS
Don't accord for new borrowings to meet the expenses. The loans should be borrowed with clear plan for repayments. Surviving the crisis with borrowed funds, is not the survival; you are just delaying the downfall. Do approach to increase the existing Working capital limits as they are not attached with immediate repayment commitments. Of course, we need to meet the drawing power lines with enough stock and debtors.
10. INTERNAL PROCESS AUDIT
Do audit your Business process by yourselves or through Auditors. This is the time you need to change your business process and so we can be - more cost effective, be process organised, cut across inefficiencies in the operations, tighten the revenue leakage, manage your receivables & Payables.
The views expressed herein are personal views & suggestions. This can't be road map for every one & every business. It's the responsibility of the business owners to see through their own business situations and draw out the road-map plan.
Survival is the key, Do Everything to Survive !