Short term business strategies

Short term business strategies.

Most of our business already opened or are in the process of opening. Some of those who already operate are limping along. I am explicitly thinking of sit down restaurants, beauty industry, creches, and several other businesses. The biggest tragedy is those who could not open their doors.

We are all thinking of the good old days before COVID 19. On the other hand, in a weak economy, we still could manage to keep our businesses floating.

What can we do? Are we going to survive? Can we open our business again? These are some of the questions we attempt to answer continuously.

The first step, as discussed in my previous article, is to first take care of yourself from a mind, body, and soul perspective.

Your next step now is to focus on the business.

Unfortunately, we don’t have the luxury of time on our side. We also cannot just jump in and start operating like we did pre-COVID-19. It ain’t going to work! So, where do we start?

There are a few things we need to address simultaneously. These are:

• Markets
• Products and/or services
• Cost structures
• Cash-flow
• Resources
• Operating procedures
• Digital strategies
• Marketing Strategies
• Distribution channels
• Business partnerships

Markets

There is a high probability that the market we operate within pre-COVID 19 significantly changed. Above all, we need to determine whether our customer’s needs changed and or whether we need to look at other customer niches. The majority of people will change their buying behavior driven by emotions and financial realities.

We need to relook at our market segmentation based on the following four types of segmentation:

• Demographic – The segmentation aspects that might be affected by COVID19 are Income, Location, Family Situation, and Annual Income.
• Psycho graphic – The factors that might be influenced by COVID 19 are; Attitudes, Interests, Lifestyles, Psychological influences, Subconscious and conscious beliefs, Motivations and Priorities
• Behavioral – The behavioral market segmentation principles that might be influenced by COVID 19 are; Purchasing habits, Spending habits, User status, and Brand interactions.
• Geographic – The single most crucial aspect to look at is the radius around the business. However, one cannot ignore the influence of COVID on the country, urban, and rural environments.

Products and/or Services

Do our products and/or services still address the needs of your existing and potential new customers?

We need to look at all our products and services. Questions we need to answer here are:

• Based on potential new customers and changes in market segmentation needs, is there a possibility that they might become more popular?
• If they are going to stay slow-moving products, how can we move them out of stock within a short period?
• In the case of a non-popular service, can we end such a service as effectively as possible?  In other words, which medium and fast-moving products will still be popular in the new market circumstances? Therefore, which of these products might we need to discontinue?
• In the case of a popular service, will it remains popular? After that, how can we end the non-required services as effectively as possible?
• Is it possible to combine different products or combine different products with various services?
• What new products and product ranges do we need to add to our product offerings to address the “new normal” in the market?
• What new services do we need to add to our service offerings to address the “new normal” in the market?
• Are our products still affordable and attractive to our customers?

Cost structures

We need to look at our cost structures critically. The focus here needs to be on our overhead costs, including fixed- as well as variable overheads.

Every business has unique fixed and variable cost structures. However, we are only going to focus on the more general cost drivers here, namely:

• Premises and its related costs. – Renegotiate rent and associated services costs with landlords. Above all, if possible, and you can scale down on floor space. In addition, if you can move your business to a better location at a lower cost, it might be something else to consider.
• Let people work from home where possible to save travel time, travel costs, and office space.
• Stop luxuries for the short term – (entertainment, subscriptions, memberships, etc.)
• Postpone maintenance and improvement projects as far as possible. Similarly, be careful not to be penny wise and pound foolish in this regard.
• Staff costs. I will address staff costs later in this article.

Look at cutting costs. Here it would be best if you cut deep but creative. However, I always say use a scalpel and plan and do the surgery as carefully as a surgeon.  Moreover, look at the timing there-of as well as the effect it can have on the business. In other words, focus on these areas using the appropriate methods and do not cut costs for the sake of reducing costs!

Cash-flow

One of the biggest reasons for businesses closing their doors is a lack of cash-flow. The shortage in availability of funds to finance the company especially during this COVID 19 period 

Even during normal circumstances, one of the most challenging aspects for many business owners is cash-flow, as a matter of fact, especially in the short term. There are several ways to look at cash-flow issues

• To obtain a loan from a financial institution/government if possible.
• Go and renegotiate payment terms with creditors.
• Try to negotiate lower rent from landlords (payment holidays.
• Evaluate your stock and convert as much of your older stock into cash even at substantial discounts. Above all, use a proper stock evaluation tool and techniques in making these decisions. It is important to realize that this action will provide quick short term cash.

Resources

The Key Resources, within the business, also needs to be revised.

Assets:

Identifying additional resources will enable the owner to sell some assets which are not needed anymore. Therefore, the income generated by selling these assets will assist in producing some short term cash-flow.

Staff:

• The owner must now, for the short term, look at working in the business. In other words, fulfill some of the tasks that staff can perform and document the new business processes. However, after working in the business for a short period, move back to working on the business. (Both stays important).
• Cut salaries based on shorter working hours.
• Allow people to work from home.
• Make non-key positions redundant.
• Look at changing salespeople to commission-only remuneration packages if possible at all.
• Freeze all increases and bonuses.
• Administrative support activities can sometimes be carried out by the owner’s family and even outsourced at a much lower cost.

Above all, this area offers a lot of cost-cutting opportunities. In addition, be sure to do it correctly, not only in terms of the law but also in being empathetic and humane.

Operating Procedures

Our new short term business strategy will require the re-engineering of our existing business process. Therefore revise the business’ functions based on the change in services, products, customer needs, and operating procedures.

Several well-proven business re-engineering methods are available to follow. Therefore, relook all processes, and those that do not serve the business discontinue them. (delete them).

Document business processes graphically as far as possible. Above all, the key phrase here is “keep it stupid simple.” Make use of software applications to document these processes and keep them up to date.

Adapt operating procedures to the needs of the “newly restarted business.”

Digital strategies

Re-engineering our business process might lead us to adapt to our digital environment. In addition, some of our systems might be outdated. Therefore, we might also unnecessarily pay for the support and maintenance of such systems and infrastructure. In addition, there are several software applications available today as freeware. Some of these freeware might pose specific challenges like security issues. However, there are well-proven, stable software applications available. In conclusion, do not summarily write them off.

Digital transformation is a reality for the last few years. However, businesses were just not willing to adopt it. Now is the time. Above all, look at how you can digitally transform your business to perform more effectively and efficiently. Moreover, change your mind around Digital technologies and your business and develop and implement a proper Digital Transformation Strategy.

It might be feasible to implement an e-commerce site and do more of our sales and even support on-line.

Marketing strategies

Over my years within the business environment, I, unfortunately, experienced the cold reality of first cutting the marketing budget when there is any sort of financial pressure. Above all, not once did I experience the drastic lowering of the marketing budget to lead to any positive results.

During difficult times we need to increase sales and cut unnecessary costs as already discussed in this article. The last thing is to cut marketing costs and resultantly scale down on marketing drastically.

By saying this, I do not mean that we must not revise our marketing strategy. However, we need to adapt our marketing strategy based on the change in services, products, customer needs, and operating procedures.

It is time to focus our marketing specifically on our TARGET market. In conclusion, DO NOT STOP marketing

We need to relook our marketing media. For instance, digital marketing can be a cheaper but effective way to market. It is crucial to know that digital marketing needs specific knowledge. Similarly, adds on social media alone will not do the trick. Therefore, we need a comprehensive social media strategy.

Marketing remains one of the essential areas in generating sales.

Distribution channels

We need to relook at our distribution channels as a result of the change in services, products, customer needs, and operating procedures.

Some of the aspects we need to look at are:

• Does our channel partner still serve our new target market?
• Is our channel partner still allocating the required resources to sell and market our products and services?
• Does our channel partner still honor their sales targets?
• Is our channel partner still honoring all agreed payment terms?
• Does our channel partner show the commitment to our business, products, and services?

Business Partnerships

We need to relook at your key business partnerships based on the change in services, products, customer needs, and operating procedures.

The business partnership referred to here is a commercial entity with which another commercial entity has some form of alliance. Therefore in our case, it will be suppliers and/or service providers.

We need to revise partnerships based on at least the following principles:

• The business partner can provide stock in a fast and reliable way, which will enable us to minimize our stock-holding.
• Our business partner will provide us with at least a thirty days interest-free account. Therefore we will be able to turn our stock several times before we need to pay our supplier.
• The business partner offers an excellent post-sales service, especially in terms of warranties.
• Our business partner has a flexible return policy.
• The business partner offers lucrative discount policies.
• Our business partner offers a flexible consignment stock policy.
• The business partner offers service level agreements with guaranteed levels of service delivery.

Do not hesitate to end partnerships. Above all, amicably as far as possible. Therefore, where such alliances do not serve your business anymore, it might be time to enter into new partnerships. These new partnerships include suppliers, channel partners, and all other operational partners.

Conclusion:

This article is purely a summary of what we can do to blow new life into our business during and post COVID 19. The possibility that we will be able to go back to how we did business before COVID 19 is highly unlikely. Therefore, the companies which adapt as quickly as possible and which is prepared to adapt to the VUCA environment, always are the businesses that will be successful.  In conclusion, our businesses need to ADAPT or DIE.