The business world has changed a lot in the past few months and will no doubt continue to change rapidly in the coming months. It’s highly unlikely that things will ever get back to how things were before Covid-19. The challenge facing virtually every single business today is the burning question, “Can your business adapt fast enough to survive?” Survival will be the keyword in the post-COVID-19 world, not profit, expansion or acquisitions – Just SURVIVAL.
If previous recessions are any indicator as to what may lay ahead of us, then the very real danger for all business leaders is complacency. To simply try and carry on as before believing that nothing has changed, is a dangerous delusion. Everything has changed! So must your business, if you are going to survive. This applies just as much for large and even well-established businesses as it does to smaller and newer ones. A recession – or even a depression, is coming, possibly of tsunami proportions. Now is not the time to sit on the beach building sandcastles.
Lessons from startups to survive a recession
The corporate world could learn a lot from some of the high energy entrepreneurs in our flourishing startup community. There’s much to be gained from observing how vigorously they hunt for opportunities to solve current business problems. When needed, they’re ready to quickly pivot and to gain the maximum out of each and every opportunity.
Startups, by necessity, have to vigorously control costs. It’s a matter of survival to ensure their limited, but vital cash, the lifeblood of every business, is not wasted. For them, cash is king! Startups have to be asset agile with a lean structure, using temporary and assignment contractors where necessary. Most have a relatively flat hierarchy, which improves communication and speeds up decision making. Startups know how essential it is to continuously monitor and extend their survival runway – as must every business during a recession.
If corporates are to survive then they should start acting like a startup. If not then there is a very real danger they could join the ranks of companies, which typically fail during a recession. It no longer matters how big you are, how long you have been in business or how much you dominated your sector before this crisis. None of these alone may be enough to save you if you cannot quickly adapt to the changing market. If you don’t, and somebody else does, then they will win and you will lose.
The laws in a recession are very simple. Those who can quickly adapt to the changing world around them will survive.
Hence, now is the time for all businesses to take steps towards thinking smart and working smart. That means taking steps like lightening your balance sheet. Reevaluate your office space requirements – resize if needed and free up key money. Explain to your staff the situation and get their support for your survival plans. Finally, unload any unused or seldom-used assets. Expensive luxuries have no place in a recession survival plan.
Hope for the best, but plan for the worst
A lot of companies have made changes and even cuts to survive and get through the current quarter. Some may have reserves or plans to somehow struggle through the next 3 months. However, past recessions suggest that the real danger will come by the 3rd quarter, i.e. September onwards. By then, those which haven’t adapted, pivoted, and/or managed to get their costs under control to service their new reality, may face the deadly risk of literally running out of cash.
Cash is the oxygen of business. During the past two recessions which I have owned and run businesses through, it was heartbreaking to watch previously well run and profitable companies, literally suffocate and die for lack of cash. The course correction needs to be done now if you are to avoid falling off the cliff and into the history books as just another recession casualty.
To save cash, it helps to consider the benefits of moving your business, to an office outside the city centre or even a coworking space. There are several benefits to joining a coworking space. A key advantage among them is the flexibility offered by becoming asset agile alongside the networking, and business opportunities right on your doorstep. Further, many in house tasks such as accounting, marketing, and website maintenance are, can be outsourced to community neighbours. In turn, saving vital cash and extending runway.
Ultimately, for any business to survive, it must start thinking like a startup. Constantly monitor your runway. Quickly get your costs under control and become asset agile. Be open-minded about outsourcing tasks. Focus on the needs of your customers, not your own. Stay nimble and ready to pivot if necessary. Consider collaborating rather than competing. Finally, be open-minded to engaging with your staff on a contract/interim arrangement. Adapt, improve and go forward!