HOW ENTREPRENEURS CAN MAINTAIN BUSINESS CONTINUITY DURING COVID-19
Highlights:
- Recent surveys show that only 12% of organisations are highly prepared for the impact of Coronavirus.
- Also, only 15% of business executives have confidence in their company’s leadership to manage disruption due to the COVID pandemic successfully.
As the world is still in the clutches of deadly pandemic COVID 19, the global economy keeps on shrinking and is expected to shrink by over 3 per cent in 2020. As far as the Indian economy is concerned, it is likely to contract by 45 per cent and would face a fall of 5 per cent in the gross domestic product (GDP) in the June quarter of FY2020-21. India’s growth rate can shrink by 20% in the next few months and of about 0.4 % in FY21. A pandemic has worst-hit advanced economies with a growth rate of -6%, and developing economies are contracted by -1%.
It continues to spread at an alarming speed, infecting millions and grasping its hold over the number of countries. Many countries are struggling to control the pandemic by imposing strict and tight restrictions, which have brought economies to a halt. For developing economies with much more vulnerability, they need to strengthen their public health systems and address challenges and implement reforms to ensure robust and sustainable growth, once the pandemic recedes. They will face many economic problems such as the pressure of a weak health care system, loss of trade and tourism, harsh financial conditions, subdued capital flows, and piling debt.
In such situations, maintaining business continuity is a challenging task for entrepreneurs, executives, and investors. Impact on startups and small businesses are more severe due to meagre cash reserves and assets and a lower margin for managing unforeseen risks. In such a stressful and high-risk environment, entrepreneurs will have to adapt to evolving global challenges to keep their financial wheels turning.
During these times of crisis, continuing business operations is more critical than it has ever been. Business continuity and revival plans are being tested rapidly and continuously by evolving to the challenges such as travel restrictions and remote working to keep businesses running swiftly. All core business processes such as sales, marketing, finance, production, supply chains, have been heavily disrupted, and the present operating model is proving to be incompetent to function during these crises. To survive and maintain continuity of their enterprises during these uncertain times, they need to formulate quick and rapid response action plan to manage and alleviate the risk to their businesses. Sustainable business continuity and success heavily rely on human focus experiences combined with the continuous adaption of the latest technologies. A new operating model with mindful rules should be developed to alleviate risk and survive the period of lockdown and crisis. A new innovative approach should be adopted to make things happen timely in a disciplined manner. Strong fundamentals and leadership are critical for businesses to survive through uncertain times. Senior executives need actionable information and rapid response to make quick decisions. While most organisations have standard procedures to deal with most of the risks, but problems lie in initiating them before it’s too late. An impact evaluation analysis should be used to deal with this situation, as it makes it very clear when to trigger the response plan, to start attenuating the effects of impact on an organisation due to emerging risks. Designing individual and particular response plans for specific results would make it simpler to communicate the idea with employees, so everyone can play their part in managing the risk. It will ensure the organisation’s timely response which will help in staying afloat in times like these.
- Strategies to maintain business continuity and overcoming challenges:
- Track expenses against revenue and reduce cash burn: This will help businesses in assessing their financial situation, which allows entrepreneurs to plan ahead of time and devise plan and strategies to survive during these difficult times.
- Reorganise your business model: These days, markets are volatile and are continuously changing for the worst. Therefore, it is crucial to reassess your business model and check its feasibility in the current situation. They also need to evaluate their assets, sales, liability, and debts to overcome the shortcomings and to be prepared for the worst.
- Planning for the long term: No one knows when this pandemic will end, and things will get back to normal. So, it very important to configure the business strategy to reduce expenses and renegotiate current liabilities such as optimises salaries, postpone lease payment as much as possible. It is necessary to cut back all unnecessary costs and focus only on survival. Give thought to both short term and long term implications of pandemic and devise the plan accordingly.
- Business capital: There is a need for an ample amount of finance to run any business or startup. In this situation, it will be challenging to find any VC capital and debt funding. Investors will be very cautious while taking any funding decisions, and it would take longer than usual. Even though it will be a very challenging and tough task, planning can help you out in this situation. A more fruitful approach will be requesting existing investors for additional funding, as they are more likely to help you out. Foundations and bank credit can also prove to be the fastest source of cash.
- Preparing a robust framework for communication: As everyone is working remotely, an active and healthy communication strategy is needed to be developed to ensure there are no communication gaps anywhere. Keep the team updated about every development and keep them engaged and connect. Maintaining high spirits within the organisation and keeping them motivated is very crucial during these times. Communicating transparently with customers can help them empathise with companies facing a crisis. Consult with investors and experts to plan the right form of communication with stakeholders, customers, and employees to sustain businesses running with agility, flexibility, and responsiveness.
Positive outlook:
There are chances of global growth rate reviving to nearly 4.2% in 2021 if pandemic recedes and domestic migration bans are lifted till mid-2020 for developed countries and later in the second half of 2020 for emerging markets and developing countries.
However, Recession could even be deeper and worst, if COVID 19 outbreak continues, leading to an extension on restrictions on movement and lockdown, causing prolong disruptions in economic activity. It will result in the global growth rate to decline by almost 8%. Policymakers should come up with innovative measures and actions to support the economy and alleviate the economic damage.
Global cooperation and support are much needed during these times to slow the spread of the pandemic and to take economic actions to mitigate the effect of the Recession on global growth. International support offers the most excellent chance of rapid global recovery and achieving public health goals along with measures to reignite growth.