The impact of the coronavirus pandemic is being felt by businesses all around the world. They are all facing uncharted waters. There has never been a more pressing need for companies to re-think and reconfigure their business model. Many organisations are facing challenges by accelerating digital transformation, re-evaluating scenarios, shoring-up cash and liquidity, implementing agile operations, and more.
For sure you already know the scenario above. Before we start, I will be honest and transparent: my post cannot compete with a McKinsey study concerning the business implications of the Covid-19. As, the purpose of my blog post is not to share a 20-pages accurate report about how the coronavirus caused significant disruption to the global business environments. Neither will it show you graphics and statistics regarding this topic nor will I present to you a complex contingency plan. Nevertheless, I would like you to get a simplified overall picture of both Covid-19 positive and negative implications so that you can make predictions easier, implement decisions for the future of your company and find the best business solutions despite the fact that the world may never be the same again.
In other words, too much information concerning this controversial topic may cause paralysis by analysis for any small and mid-size business owner (and I guess you’re one of them). This is the main reason why I wrote this article. Hopefully, it will help you step back and look at the big picture so that you can lead your business to success despite the economic downturn caused by the coronavirus pandemic.
Also, leading your business to success does not mean surviving Covid-19. According to Science Direct, “once we get through this pandemic, we will emerge in a very different world compared to the one before the outbreak”. Therefore, growing a successful company means adapting your business to a new world. Re-thinking a business model is not about a temporary solution to overcome the crisis caused by the coronavirus pandemic. Re-thinking a business model means finding lasting and viable business solutions that are applicable in the long term (especially because pandemics are recurring events, meaning that you must be prepared in the unfortunate event of seeing another outbreak in the future – I do not want to be pessimistic but they say that pandemics seem to occur at 10-50 year intervals as a result of the emergence of new virus subtypes from virus reassortment).
Table of contents:
- A few considerations concerning the Great Lockdown and its impact on businesses
- Covid-19: positive implications for businesses
- Covid-19: negative implications for businesses
Most reports available on the Internet concerning the impact of the Covid-19 on business are macroeconomic reports. For sure they share valuable information for entrepreneurs and business owners. But do they actually help you create a long-term vision and make smart decisions for your business? So, here is my first piece of advice: do not spend too much time thinking about the impact of Covid-19 on businesses in general. You should rather think about the implications of the Covid-19 pandemic on YOUR business and what you should do in order to find long-lasting solutions for your company.
Consider that the impact of the coronavirus pandemic is different for each business according to various factors, such as:
- Number of confirmed Covid-19 cases in each country
- Business industry (as you already know, the sectors that have seen the largest increases in unemployment are those that require the physical presence of the customers, for example, hospitality, tourism, and entertainment)
- Measures adopted by the governments of each country to prevent the spread of the coronavirus (for example, Sweden is one of the countries that stood out the most for not imposing a lockdown, where Melbourne, Australia was seen as imposing one of the strongest lockdowns)
- How each country supported businesses (some countries have chosen to support businesses in order to help them keep the workforce intact, while others with less financial strength couldn’t do the same)
- Strengths and weaknesses of each country’s health care system
I imagine that you are asking yourself: “Why did you write a post about the implications of the coronavirus pandemic for businesses if you think that it makes no sense talking about these implications in general?” Well, I am not saying that it makes no sense considering the general effects of the Covid-19 on business. But you should use them just to get an overall picture of this situation without too many graphics and statistics (as I told you previously). Every business is different and you should find the most suitable solution for yours (that might not be suitable for other businesses).
Below you will find some of the positive effects of the coronavirus pandemic on businesses (I chose to start with the positive implications as I always see the glass half full – just to prove to you that I am not a pessimist).
- A new (and more convenient) way of working
Remote working is probably one of the biggest changes we’ve seen implemented across the world. Many companies were left with no choice but to shift to remote work as the governments of most countries asked people to respect the social distance and stay at home. Also, for many companies, remote work was a success.
This is not something new but remember, re-thinking a business model is not about using a temporary strategy to overcome the crisis but about finding lasting and viable business solutions that are applicable in the long term in a post-Covid-19 business environment. If people can work from home in the same way as they were in a physical office, why not implement remote working as a permanent work style? Why should small and mid-size companies pay high employee and overhead costs when they could simply rent a virtual office that brings the same benefits as a brick and mortar office but without all the expenses involved by renting or buying a physical space? So, potentially the Covid-19 pandemic revealed a new and more affordable way of working for many businesses.
- Improvement of the organisational structure
For some businesses, the Covid-19 pandemic revealed some weaknesses in the organisational structure. As a result, business owners were forced to find solutions in order to strengthen them. They found a way to organise their companies more effectively.
For example, remote work requires roles and responsibilities to be defined in a clear way. Remote work cannot be implemented successfully in a company where the roles and responsibilities of several employees are not defined clearly (for example, responsibilities for supervision are not clearly assigned to specific positions). Therefore, many businesses had to fill in the gaps in their organisational structure.
A good organisational structure increases productivity and facilitates the achievement of short and long-term goals. Also, re-thinking the organisational structure of a company may reveal some unnecessary or redundant roles that make a company lose money.
- Creating a new business budget
The Covid-19 pandemic forced some business owners and entrepreneurs to re-think the budget strategy of their companies. Did you ever ask yourself: “Do I spend money wisely to grow my business?” or “What expenses should my business prioritise?” If your answer is yes this means that you started re-thinking your business budget.
For example, many business owners are now aware that spending a high amount of money in business meetings and dinners is not always necessary as virtual meetings can most of the time be as effective as in-person meetings (since the Covid-19 pandemic forced meetings to go virtual). For many of them, virtual business meetings are now the new norm. Why should you pay for a business dinner (or plane tickets and hotel in case you must travel to meet a customer or supplier) when you can simply use an efficient communication tool? However, it is important to note that it is not that face to face meetings are no longer important (you can learn more about this topic by clicking here), but it is strongly evident that some business meetings can be conducted virtually, while still being effective. Also, for those businesses that have no physical office, there are rentable meeting rooms available for important face-to-face meetings.
The negative implications of the Covid-19 pandemic for businesses are quite obvious. As I mentioned previously, the sectors that were mostly affected by the lockdown are those sectors that require the physical presence of the customers and where the pandemic led governments to adopt measures by shutting down economic activity (eg tourism, travel, wholesale and retail, hospitality, and entertainment).
I will not start a long speech concerning the most obvious negative effects of the coronavirus pandemic on businesses as I am sure that you are aware of all of them (less demand, challenges concerning the global supply chains, outstanding receivables, not enough money to pay off debt, shipping and delivery issues, new norms for a hygienic office, etc.).
However, there are 3 negative effects that the Covid-19 pandemic had on businesses that I personally consider less obvious:
- Influence of panic on strategic decisions
This negative implication of the pandemic is related to one of the key ideas of my post: reconfiguring to a new business model that is effective and instils lasting strategies for a company (not just temporary solutions).
For example, let’s assume that you own a clothing manufacturing company. As the lockdown forced many people to stay home and wear masks when out, so you decide to change from making office clothing in bulk, to producing face masks, hoodies, and loungewear. But are you sure that this is a good decision in the long term? What happens when the pandemic ends? Will everyone end up hating loungewear (even if I must confess that it is a lot more comfortable than an evening attire) and wearing masks so much that everyone will want to buy boutique, one off clothing pieces? How much money will it cost to pivot into the new type of manufacturing to supply the potentially short-term demand? What about the pivoting for the second time to post-Covid-19? What considerations have you made if people no longer go to your shop?
Sorry for repeating, but I find this a valuable idea: strategic decisions are long-term decisions and not temporary solutions to overcome a crisis (no matter how hard that sounds when you have impending bills, debt to pay off, etc – as every situation is different but you want to be around for the long term). According to a study published by Intech Open, effective strategic decision-making can significantly increase the performance, success, and survival of corporations.
- Increase in competition
A business may deal with new competitors due to the coronavirus pandemic for two reasons: first, competitors may lower prices in order to face new market challenges, and therefore, you are forced to do the same. Otherwise, you risk losing out customers. Secondly, many businesses may decide to deliver the same products or services that are in high demand.
For example, if you think of selling hygienic hand rub you should expect to deal with many other companies that sell the same product. In this case, is there a way you can be different from competitors? Can you improve the product you offer to your customers or make it unique? However, no matter the type of business you run you should expect to deal more often with competitors due to the coronavirus pandemic.
- Not meeting consumers’ demand
During the lockdown, the demand for some products increased dramatically. If a business is not ready to meet consumers’ demand can risk losing customers altogether. For example, some businesses were organised so that they could produce a specific quantity of yeast in a specific time interval. When the demand for fresh yeast increased as many people were preparing home-made bread, some companies were not able to meet consumers’ demand.
For a buyer, finding out that a product they want is unavailable is frustrating. Some customers may give your product more than one opportunity, but eventually, they want options that are consistently available. Also, when you have unsatisfied customers you also have negative word-of-mouth advertising which can have a very negative impact on a business image.
Hopefully, both negative and positive implications for businesses of the coronavirus pandemic that I mentioned previously can raise a question (and answering all these questions can help you have a better understanding of your business strategy in the actual global situation).
Below you will find the most relevant questions for a business owner that the negative and positive effects of the Covid-19 pandemic can raise:
- A new (and more convenient) way of working – Does your business actually need a physical office?
- Improvement of the organisational structure – Are all the roles and responsibilities within your company clearly defined?
- Creating a new business budget – Is there any business cost that you can reduce or eliminate because it doesn’t help your business growth?
- Influence of panic on strategic decisions – Are the business solutions that you have found during and after the lockdown strategic solutions that can help your business grow in the long term?
- Increase in competition – Do you have to deal with more competitors? If yes, what is the best way for you to handle the business competition?
- Not meeting consumers’ demand – Are you able to meet all your consumers’ demand and offer them products or services that are always available?
Also, let us know if the coronavirus pandemic convinced you to leave the traditional office behind. B2B HQ would be more than happy to assist by providing you with a virtual office that might help your company deal with the challenges of the new business environment.