The Covid-19 has hit the businesses very hard in all the sectors worldwide. This is not some breaking news that I am telling you, because in one way or another, we are suffering due to this pandemic. Whether it being any consumer company, retailer or manufacturing, all need to adapt and improve with this new way of life in order to sustain and survive. The customers/ clients cares about the sustainability of the business and to achieve the same, survival of the business is vital. A strong business management is need of an hour for successfully sustaining a business. I myself felt that the business of, number of my clients, is suffering at this point of time.
The sales have dropped substantially. Whether, we believe it or not, the efficiency of human resource had fallen to some extent due to work from home model. The working capital of every business is drained, due to continuous fixed expenditures and reduced revenues. Even the operating cycle of the businesses is not working well due to intervening lock downs here and there in the country and worldwide. So the question here is how to manage your business so that it can survive in this tough phase? Let’s discuss some very basic but effective techniques to manage your business, which can be adopted either by a retailer or an industry:
1. Shrink your profit margins: At this hard time one should need to survive and not seek to make big profits. Every businessmen/ professionals whose business is distressed should look for circulating the stock or imparting services at low margins as this will help the survival of the business and retention of the customers. We should not ignore the fact that the purchasing power in the hands of the customers is not as much as it was prior to this pandemic and the people are trying to expend only on goods/ services which are most required. By reduction in profit margins marginally, one will not only help his/ her own business to survive; instead one will also help the society at large by making available goods/ services at affordable prices.
2. Care for working capital: Due to fixed expenditures like payroll, rentals, utility bills, the working capital of nearly every business has been drained plus there was “near to nil” sales revenue during the lock down period. To eradicate this vicious gap, one need to inject some fund depending upon the size and need of business in order to put it back on running track. The source from where you plan to inject these funds is most important. These days the major mistake most of the people do is to opt for easy available source of finance without judging its carrying cost and repayment schedule. The most effective method is by liquidating the earlier investments (if any) or some assets (like an immovable property), and use that money for your business. This will reduce your finance cost and help you to be more competitive.
3. Do not rush for bank loans: Due to various relief packages being announced by the Government, the bank loans, especially the MSME loans, are like hot cakes these days. These loans are available to existing bank customers who are registered under MSME Act. But I will suggest do not rush to the bank and avail the loan simply because they are giving money to you, unless until, your business actually needs finance and you do not have any other interest free option available. Trust me the more you put your business under debt, the more problematic it will be for you to survive in the future.
4. Retain your human resource: Reduction of expenses by retrenching the staff is not wise and is not a solution to survive your business. The employees you once considered as major assets for your company are now suddenly pushed to the liability section of the business. Always remember they are not sitting ideal by choice, but by situation. A humane approach in this tough time will help in securing the trust of the people who work for company/ business. Moreover think of the training cost of new employees (Post this situation) that you can avoid by retaining your old staff.
As I always say I like to keep the blogs crisp, simple and short to read. I will surely discuss the other aspects of sustaining your business and its management in Part-2 of this blog. Do write to me if you like reading this blog and login to my website for more blogs on my experience and knowledge.