By: Solomon Ali
MANATEE/SARASOTA – The face of the American economy is forever changed by this Coronavirus pandemic. In three weeks’ time, we’ve witnessed financially viable companies go into rapid freefall by the millions, starting with employees and trickling rapidly. Small to mid-sized businesses are laying off in record numbers, and there is no clear end in sight. With the spread of Coronavirus, people are being asked to choose between their livelihoods and their very lives. Businesses are pairing down to “skeleton crews,” keeping just enough workers on board to get by and doubling remaining employees’ duties. Never before have we realized just how interconnected we all are in our quest for survival.
More than 20 million Americans have now filed for unemployment, an unprecedented figure. Solomon Ali, CEO of NDR Energy Group and Revolutionary Concepts, gives us tips on how we can brace for financial impact and minimize the fallout.
Communicate with Your Creditors and Debtors:
Explain where your company is at, discuss options and re-negotiate terms if you can. Inquire about extensions on payment terms, request waivers of late fees and penalties. The good news is that you are not alone. Tens of millions of people are currently in the same boat and your creditors know that. In many ways, this puts you in the driver’s seat to renegotiate payment terms and obtain some forgiveness on penalties that would normally be imposed.
Reach out to the current customers you do business with to gauge where they are at. Offer discounts and other payment incentives to get whatever liquid money you can upfront. For example, if a customer owes an outstanding balance of $1,000, make them an offer to pay you $700 now to settle the account. This will give you much needed cash in hand. Regarding new sales, companies should be all about solving customers’ pain points right now.
Identify Pain Points and Solve Them:
Identify your customer or client “pain points” during this time and strategize to solve them in a way that could potentially make you indispensable during a time when most products and services will be cut from the equation. Whether that is free delivery, discount packages, future incentive packages, extra services or penalty-free rescheduling; the old playbook no longer applies. Become flexible in your approach.
Form Strategic Alliances:
Companies should also look to industries that are thriving and communicate their desire to align and/or partner with other companies to leverage profitability, innovation and market share. Seek out companies that offer complimentary products or services and reach out to see how you can help one another. We are living through times where people are more emotionally receptive, because no matter what industry you are currently in, we are all feeling vulnerable right now.
A Few Types of Partnerships:
Joint Venture – If you decide to merge with another business in your industry to combine assets and resources, you are going to need to consolidate and cut costs. For example, Company A may have a stronger sales team, but Company B has a better administrative team. You would consolidate those resources, keeping Company A’s sales force and Company B’s administrative team. We cut costs down because we are working together and trimmed the fat.
Equity Investment – A private equity investor comes in and either loans you capital or invests capital into your company. This means that you are loaned money in exchange for equity in your company. A private equity investor may extend you a line of credit to help you survive this climate. You don’t pay back an equity investment in traditional terms, but you will find your ownership stake shrinking, perhaps considerably. The good news is that the equity investment would likely outweigh the loss.
Acquisition – Getting acquired by a larger business that has the financial wherewithal to support your business and keep operations afloat during this period of time places a strong bandage on the current uncertain marketplace. This means you will not be in such dire need of immediate profits to stay alive or to plan the future trajectory of your business. You can also maintain your marketing and advertising efforts and continue to grow your market share without immediate profits, but with the future projection of profits.
Streamline Efforts with Technology and Outsourcing:
Can I have my workforce work remotely? Can I outsource my marketing and advertising team? Can I streamline my administrative with technology or keep my workforce intact but teach them how to be more efficient with the use of technology? These are some of the questions to ask yourself during this time. You may find out through an efficiency audit of your business that 20% of your workforce is doing 80% of the work. With that information, you can pivot your efforts and infrastructure accordingly. This is an opportunity to become more efficient and more profitable in the long run.
Keep Your Eye on Fall 2020:
Companies can use the spring and summer months to position themselves for an autumn boom, if they take the right strategic steps. The financial effects of Coronavirus will be felt long after the pandemic is under control. We will feel ripples and aftershocks well into 2021 and perhaps throughout this decade. This means that business as usual is a losing proposition. Our economy will recover, albeit with a different spin than before. We will see a rise in consciousness about the way humans treat and consume animals, and we will begin to shift towards more of a cause and effect mentality. We will also come back together and socialize in slightly different yet distinctive ways, with a return to more community-based activities. Local parks, places of worship, board games and general fellowship with one another will be newly discovered and offer a newfound charm.
Employers will also become more accommodating of remote workers and flexible schedules, and will be more accommodating to sick leave and other dispensations that support employees’ health and well-being.