How Enterprises can do strategic planning to prepare against a recession after lockdown?
Coronavirus pandemic (COVID 19) has resulted in nationwide lockdown, forcing businesses to shut down apart from making people isolated and confined to their homes. This has resulted in so much uncertainty and major disruption to our lives.
While it is unknown what will be the economic impact of the lockdown, the below measures an enterprise can take in-order to strategize and plan for future recession:
Assessing your current position
You’ll need to understand your company’s current financial position and try to analyze the market trends during the lockdown. Then you’ll have to know the operational challenges and employee issues.
You’ll need to assess your cash flow. How can you cut off expenses and free up some cash? How much credit you have on hand and how long can you survive on savings? Do you have any pending payments to suppliers or from customers?
The first and foremost question that you would face is “Do you have a strategic plan in place?” If you already have one then it would help you do things the required way so that you deliver to your customers. If not, you need to prepare one quickly and concisely.
Running out of cash can turn fatal in the present situation. If you had some cash reserves, you’ll feel secure now. Set aside some cash now, take a hard look at some of your costs, and ensure you do not make any superficial unnecessary expenses.
Improving the cash flow
You should have a positive cash flow for which you should get your customers to pay on time and make them clear any pending payments. Postpone payments to suppliers. Talk to your bank about your credit.
Do not fear, stay in the game
Now is the time to put extra effort into the retention of existing customers instead of panicking. To prepare your enterprise during the lockdown period and recession, become more customer-focused, get closer to them via different channels like online, and become adaptable to their needs. Use the lockdown period to become indispensable to them and improving customer experience now will help you stay afloat in the post coronavirus recession.
Keep your existing clients/customers informed about your future plans, how you are dealing with the crisis, and if any of your products/services are affected during the lockdown. Offering customers discounts, postponed payments, and free subscriptions can further strengthen your customer base.
Since some of your products/services might be hit, it is sensible to diversify your business now. That would avoid you being over dependant on one line of business. Shifting to another niche that is thriving during this crisis will allow you to have different sources of revenue.
If the economy slows down, then the demand for your product decreases, and the inventory requirement will also come down. Do not hold on to more stock than you need right now so that you don’t lock some of your working capital and your money gets stuck.
You may have to layoff some employees to withstand the future recession. Instead you can hire freelancers, contractors, and temporary workers. When you have a flexible workforce, your company becomes more agile and can get back on track when the pandemic gets over.
Change your marketing strategy
The COVID 19 pandemic which has forced lockdown has made the world go online. So it’s the time to switch to a digital model for selling your products/services or making/receiving payments. Your sales strategy will now have to operate in a way that is more comfortable for your customers.
You’ll need more interaction and empathy towards customers so that you can connect with them. Pitching in with your business plans aggressively might backfire now. Instead a critical approach is needed wherein you neither seem mean or sound opportunistic, yet are able to build a bond with existing/new customers that will turn fruitful later.
Now is the time to focus your efforts on trying to improve efficiency. You will need to review major processes that are time-consuming or expensive. Getting rid of them now will reduce your major costs.
Review Supply Chains
The economic damage done by the pandemic will require some time for enterprises to recover. So not only processes but also supply chains in your company will need to be evaluated and restructured.
Automation can not only enhance processes in production but also handle employee attrition. Due to the COVID 19 pandemic, companies have incurred huge losses already and may go into further losses. As a result, the focus on automation will only get bigger starting from now.
Borrow, get a loan
Since bank loan rates will reduce owing to the slump in the economy, now is the time to take advantage of this situation by borrowing money cheaply. Invest this loan into new niches to support future growth. If you already have a loan with a bank and the premium is becoming a burden, then talk to them to extend the tenure. Also try to consolidate debt.