Business | 10 min read
The COVID-19 Attack: How To Deal With Arising Business Risks And Turn Them Into Benefits
Any business has its ups and downs. Bankruptcy, problems with supplies, loss of customers, reduction of demand — this list may be extended. But force majeure circumstances cannot be ignored as well. Today such circumstance is called coronavirus, or COVID-19.
In 2020, a new threat to humanity came in the form of coronavirus. Authorities in 167 countries and territories have reported more than 350,000 cases worldwide at the moment, according to CNN Health.
This virus is especially dangerous for people with chronic diseases and older people. However, no one has immunity from it yet, so we all need to take necessary actions to protect ourselves and stop the spread of disease. That is why worldwide quarantine is taking place, and all people must be isolated from each other.
As a result, the world economy is suffering since all types of businesses lose their position, and they have to adapt to new changes. Therefore, considering the threat of coronavirus, prepare your business for current conditions. How is it possible? You will find the answers in our article.
The Impact On Businesses And World Economy
Starting with China, a country that largely contributes to the world economy, its authorities had to suspend business operations that lead to dragging down the global economy. As Ben May, the head of global macro research at Oxford Economics, stated that the key issues are not the number of the COVID-19 cases but the level of disruption to economies due to containment measures.
In the OECD March report related to GDP growth forecast, China is expected to grow by 4,9% this year, whereas earlier forecasts showed 5,7% expectations. As for the global economy, it is likely to increase by 2,4% in 2020 compared to 2,9% stated in the previous predictions.
Coronavirus’s impact on businesses is undeniable. And it is necessary to evaluate risks entrepreneurs have to face.
Consequences Of The Coronavirus For Businesses
Long-term quarantines worldwide, travel restrictions, and other related measures lead to falling in consumer and business spending until the end of Q2 (quarter of calendar year), according to McKinsey. And it produces a recession. Even though in most parts of the world, the outbreak will be under control by the end of Q2, the negative dynamics will prevail till the end of Q3.
Consumers stay home, businesses lose revenues, and the unemployment level will also rise. Besides, more companies go bankrupt, companies lose business contracts, and all these cases lead to significant pressure on the banking and financial system.
Experts think that it takes until Q4 for the European and US economies to face the recovery and start rising.
How To Prepare Your Business For Crisis Risks Caused By The COVID-19
Since the coronavirus outbreak bears risks for all businesses, it is necessary to prevent severe losses and take all appropriate measures. There are a few must-have steps to consider, and they are especially valuable for small businesses.
First, all countries with a high-risk area provide all companies with assistance concerning financial difficulties. Companies may file for suspension of payment if they cannot pay their debts temporarily, or they may use debt restructuring. It will prevent them from bankruptcy, helping small businesses, in particular.
Second, if your company has problems with tax payment, you can apply for a payment extension. Besides, you won’t be fined for late payment, and penalties are canceled within the term of the COVID-19 outbreak.
And third, minimize the potential health risks for your employees by letting them work remotely. Of course, not every type of business makes it possible to ensure remote work if we speak about industrial enterprises, clinics, etc. In this case, provide employees with personal protection gear. As for meetings and conferences, it is better to hold them online if there is an opportunity.
Tips For Your Company To Get Through The COVID-19 Crisis
How do you respond to a crisis in a business? That is the main question all entrepreneurs are concerned about. So we did a comprehensive research and here’s a guide how to deal with crisis risks to make your company work even in such difficult circumstances.
Build a reliable eco-system for remote work. As we already noted above, you need to ensure the opportunity of remote work for all employees if it is possible. To achieve it, you should hold a meeting with heads of departments to coordinate the process of remote work. You need to discuss all scenarios of remote work, how it will be done, and how the process will be monitored. So online meetings, chats, and emails will become the primary way of communication.
Be prepared for operational bumps. That is, first, you need to have cash in hands since there may be problems with financial instruments and banks to make online payments. Cash will be your safety bag to pay salaries and make some other essential expenses.
Second, think about the cooperation with partners/suppliers from countries that are not severely affected by the COVID-19. It will be a backup plan to lead your business through the crisis.
Focus on digital transformation. Online business rules today. Delivery services may be performed, providing that all safety measures are adopted. So doing business digitally may be a perfect option, and we will describe the advantages of digital transformation in the next section.
Don’t stop. Your competitors are likely to be in the same situation as you are. So you shouldn’t get in despair. Your goal is to find the best option on how to improve your business in such circumstances (going online is one of them).
Humanity is never old-fashioned. It is not a tip or step. It is just a piece of advice. Be humane and help each other. Many companies tend to support various non-profit organizations that are involved in volunteering during the COVID-19 outbreak. If it is acceptable for your company, try to become a community player. This is what should be included in a crisis management plan.
Digital Transformation: Ways To Give Your Business A Second Wind
As we promised, we will speak about digital transformation in detail since it is a real opportunity to make your business more advanced and follow trends. This is one of the ways how you can respond to a crisis situation due to coronavirus attacks.
So why should you go digital? Let’s consider a few benefits of digital transformation:
Wide range of capabilities. Working in an online environment provides you with limitless capabilities to promote your business and get more customers. eCommerce, training courses, ordering systems — everything can become your new way of revenue. As for eCommerce, such a giant retailer like Amazon didn’t lose its positions — the number of online purchases has increased.
Enhanced customer experience. Using digital services, you may provide your customers with a personalized experience, analyze their tastes and demands better, and give them what they need at the moment. Besides, as everything is done online, your employees don’t contact customers face to face, and the threat of disease transmission comes to naught.
Remaining competitive. When your business is competitive, it means your company provides services that people use willingly. Transforming your company into a digital business means you go the right way, and you want your business to grow.
As for successful examples of digital transformation, we indicated such companies like the following:
IKEA. A furniture giant has created its app that uses augmented reality to help users visualize how furniture will look in their own homes.
LEGO. Its online community allows users to share their ideas on new sets, and if the number of votes for one set exceeds 10,000, LEGO picks a winner, creates a set, and it is sold worldwide. Thus, it increases customer loyalty since customers are the source of new inspirations and creations.
Starbucks. A world-known coffee company has launched digital menu boards recently. They allow Starbucks to collect customers’ demands and feedback and change the product depending on the time of the day. It contributes to sales increase and customers’ satisfaction.
To start the digital transformation, you need to create relevant software, whether it be website or mobile — it depends on your scope of activity and goals of the business. Hiring an experienced development team is the next step you should manage responsibly.
The team of Cadabra Studio has plenty of skills and opportunities to help you with digital transformation: build an eye-catching design along with a mobile or web app, and provide development for your product on any stages. Get in touch with us at any time convenient for you.
Bottom Line: Forewarned Is Forearmed
Humankind faced a pandemic that damaged the world economy and showed our unpreparedness to the large-scale outbreak. However, the goal of every person is to learn the lessons of this painful experience and be forearmed. Scenarios of urgent situations must be updated considering the consequences of the pandemic.
Some businesses will collapse, and many people will become unemployed. It means your business should be adaptable, so you will be able to accept the rules of new circumstances. If you do so, you will own the business that will both let people work and become profitable. The problem of partial unemployment is solved, and business troubles are solved — two in one.
Online shopping, online education, health services — some examples of how you can transform your business and stay afloat. If your business can go online, it must go online. The development of a website or mobile app is possible almost for any type of service. And we are always ready to assist you in dealing with barriers you may come across. Just remember — there is still a way out!