FROM CRISIS TO STRENGTH
The present pandemic is causing economic challenges globally and causing distress for businesses. The present and future challenges are varied, but there are ways to survive tough times and move towards a position of strength.
Present and future challenges
Businesses globally have been enduring much unpredictability and distress in a short span of time, as they coped for with supply chain disruptions, cost increases, a plunge in demand and revenues, and uncertainty about their sustainability. The business landscape is changing, as some business models will be obsolete and some plans will have to be adjusted.
Organisations such as Virgin Australia, Diamond Offshore Drilling, Frontier Communications, Flybe, Hertz Global Holdings, and Compass Airlines have filed for bankruptcy or shut down. Boeing, Emirates, Renault, Genting, and IBM have announced job cuts.
Businesses are fighting for their survival, as cash flow issues continue to weigh them down. Though the current situation is challenging, businesses should also focus on their recovery strategies and work towards gaining a position of strength in a changing landscape. True entrepreneurs are known for their resilience, nimbleness, and flexibility. These traits should tide them through tough times.
Surviving tough times
As cash flow is critical to the survival of businesses, they should rely on their credit lines, which can potentially provide a lifeline for businesses. However, this depends on the utilisation of credit lines, with short maturing periods, and can be affected during challenging economic times.
The ability of firms to roll over debts and the size of their cash buffers will also have a strong influence on their ability to cover operating losses and debt service obligations. Bridging loans would help ensure that the sudden stop to corporate cash-flows does not lead firms to a near term default on operating expenses, wages and salaries, or short-term obligations.
Moving towards a position of strength
Businesses that adopt digital solutions will be more likely to survive. The food and beverage sector can adopt online distribution channels. Education and medical clinics can also potentially adopt digital solutions in delivering their services. For other businesses, they may have to consider product diversification or provide value-added services to survive.
Making the transition to a platform model can accelerate efforts to digitise businesses. With ecosystems of technologies, services, and products that bring consumers and producers together, businesses can extend their reach when they are offering their products and services.
As talent is considered the most valuable asset in an organisation, it is important for business leaders to continue to attract and retain their employees through proper training and refreshment. Employees have four primary needs of their leaders, which are trust, compassion, stability, and hope.
When employees are enthusiastic about the future, they are more likely to be engaged in their work. With skills and competencies that enable them to adapt to the changing business environment, productivity, growth, and innovation within the business can be increased.
In conclusion, business can survive tough times and move towards a position of strength. Cash flow issues are most critical at present. They need to be addressed with credit lines and bridging loans to ensure continuity of businesses. Adoption of digital solutions and leadership from management are also important to spur recovery and movement towards a position of strength.