While it's good to be optimistic about the future, the reality is that the business environment won't go back to the way it was in early 2020. The impact of the COVID-19 pandemic and subsequent restrictions have permanently changed attitudes and behaviours - and what expectations are realistic for many businesses in 2021 and beyond. Here we offer a few ideas to help companies make it through challenging times.
1. Develop an agile business mindset
Peter Drucker said, "The greatest danger in times of turbulence is not the turbulence - it is to act with yesterday's logic." Businesses that adapted to new logic over the past year were able to keep going in the face of turbulence. For example, dine-in restaurants and cafes that switched quickly to a takeaway service were able to keep going during tough times. Although, many of these businesses saw dramatic decreases in revenue, they were able to reopen when restrictions were eased because they were able to adapt.
Likewise, large grocery retailers had to adapt quickly to fast-growing demand for home delivery. This included enhancing IT infrastructure and boosting productivity in fulfillment and logistics. Considering your business, what steps have you taken, or could you take, to respond to changes down the road? Developing an agile mindset will increase your chances of surviving through ongoing turbulence.
2. Automate processes and operations to improve efficiency
Automating manual processes saves resources that can enhance the long-term prospects of businesses. One area that automation can be applied for most businesses in accounting. For example, automating accounts receivable can include creating automatic email reminders when invoices are overdue. This will free up staff time for more important tasks for staff. Automation can also be applied in customer service to save money and boost results. An example is automating responses to customer email enquiries. By using a contact form that works with automation software, you can automatically and quickly send a customised email reply to the customer submitting the form.
Automation tools can reduce the time required for managing social media platforms, gaining more followers quickly, and making a bigger impact. For instance, you can send an automated invitation for customers to view and like your social media pages on different social media platforms, with the goal of increasing your social media followers. Research has shown that marketing automation increases sales productivity by 14.5 per cent and reduces marketing overheads by 12.2 per cent.
Given the benefits, it pays to consider how automation can be applied in your business.
3. Collect data and use it
Data makes it possible to keep up with change in turbulent times by helping you make better decisions. As noted in a report in the Analytics Advantage report by Deloitte, 49% of business leaders believe that data analytics is a key factor in improving decision making. While it might appear that harnessing data is something for big businesses with big budgets, small businesses can use data and apply it more quickly than large businesses.
Using data at your fingertips can give you a clearer picture of your customers - what motivates them, how they chose products and services, how they prefer to buy, why they switch suppliers, what they'll purchase next, and what makes them recommend a company to others. Business can also improve interaction and engagement with customers by analysing customer feedback to improve products and services. Although powerful data analytics programs such as Tableau Desktop and Microsoft Power BI are available for a reasonable monthly fee, any business can start out using existing data sources. For example:
Email marketing reports - these can tell you which topics, products or services customers and prospects are most interested in.
Sales receipts - these can show you how customer interest is shifting to certain products.
Social media analytics - tells you what the hot topics are and what products or services receive the most interest.
Website analytics - changes in website visitor behaviour and interests can show you what customers are interested in.
4. Monitor cash flow
According to ASIC, poor cash flow accounts for 49% of insolvencies for SMEs. In normal times, cash flow was one the biggest challenges for most businesses. In uncertain times, cash flow is even more important. Having a three to four-month cash flow forecast, which is updated every two to four weeks, will help you determine potential cash flow shortages ahead and take steps to solve them. In preparing a cash forecast, create several scenarios, such as optimistic, moderate and pessimistic. For the worst-case scenario, consider what the shortfall would be and how you might overcome it to keep your business running.
5. Boost your e-commerce capabilities
One of the biggest changes resulting from the COVID-19 pandemic has been the rise of e-commerce, which grew each month in 2020, hitting nearly 120% growth over the previous year in July 2020. The pandemic and changing consumer behaviour have accelerated the growth of online retail. This includes bricks and mortar businesses expanding online and dedicated e-commerce businesses.
Other factors have been fuelling the growth of e-commerce, in addition to the pandemic. These include demographic change and evolving consumer behaviour. Millennials have overtaken Baby Boomers as the largest proportion of the adult population in Australia, while the proportion of Generation Z adults continues to increase. These groups are more accustomed to spending time online. Retail businesses that adapt to the changing tastes of consumers will be more likely to survive in the short term and grow in the long term.
Big changes are also occurring in the business-to-business e-commerce as more business purchasers are expecting to get the products and services they need online. One example of meeting this need is fintech business lending. Between 2013 and 2017, fintech business lenders saw a compounded annual growth rate of 79%. These businesses have grown in popularity as a result of the convenience they provide to their customers, including quick and simple loan applications and fast turnaround times.
Businesses that make it easy to do business online can better meet the buying preferences of buyers and increase their chances of survival in the long run.
6. Focus on collaboration
At the time and after a natural disaster it's common for people to come together and help each other. In these situations, people who never met each other reach out to offer assistance. The COVID-19 pandemic has created an environment where businesses need to focus on collaboration.
One way this can be applied in business is cross-promotion marketing. It can be a powerful way to boost your momentum without having to spend a lot on marketing. With cross-promotion marketing, you collaborate with complementary businesses market each other. For example, a lawyer, financial planner, accountant and insurance broker could recommend each other to their clients. For professional service providers, this might include holding a joint seminar and inviting clients. In addition to highlighting their expertise, each business will get in front of a new set of potential customers.
Businesses that are cross-promoting can create website pages with links to trusted businesses that have agreed to reciprocate on their websites. For example, a car tyre shop can promote other specialist providers - such as radiator, brake and panel repair services - on its website.
Retail businesses can also promote each other by putting each other's promotional material in shopping bags and displaying brochures at checkout areas or having.
7. Define your niche and focus your marketing on it
It has been said that 'There are riches in niches.' When you choose a niche, you can develop your products or services to match your target market. Focusing on a niche will also enable you to narrow your marketing efforts and do more with less. This way you avoid trying to be all things to all people.
For example, if you sell shoes online, you can sell all types of shoes - women's, men's, and children's shoes. An example of a niche is selling a range of shoes for nurses - they are on their feet all day and need comfortable shoes that are solid enough to protect against needle stick injuries. By choosing this niche, you can focus your marketing to cater to a specific market. This can include tailoring content to connect with consumers in your niche.
8. Be open to changing your purpose
It's easy to get stuck by thinking that you can be in the same business and follow have the same business purpose as in the past. But this won't work for many businesses. Top-performing businesses are willing to consider radical transformation to adapt to new circumstances. Research by McKinsey revealed that 83% of top-performing companies are making bold moves in redefining their purpose in response to the COVID-19 pandemic. Given the dramatic changes of the past year, consider if your current businesses purpose fits with long-term survival. If not, follow the lead of top-performing companies and take bold steps to redefine your purpose.