The Covid-19 crisis has made potentially irreversible changes to the way businesses operate. Radical changes to market trends, supply chain disruptions, and restrictive regulations have forced all types of businesses to reassess their strategies. While many strategies that were in the works prior to Covid-19 have had to be set aside or discarded, businesses have also been forced to develop new ones on the fly.
But now is the time—for businesses of all sizes—to take stock of how those strategies need to be developed and refined in the face of permanent change. To this end, we have prepared the seven most critical challenges and opportunities that businesses must come to terms within a post-Covid-19 world.
The Seven Most Significant Challenges for Businesses in a Post Covid-19 World
- Cash Flow Uncertainty
Cash is King. The greatest challenge for businesses going forward is the inability to guarantee cash flow from one financial cycle to the next. This concern is most obvious in businesses that are directly affected by changes in footfall arising from potential lockdowns.
But even for businesses that operate away from the high street, cash flow is still a problem. The biggest reason for this is that, as so many previously dependable customers continue to face economic uncertainty, they may keep their wallets closed.
Some businesses may assume that they are immune to such developments if they operate in a sector that is traditionally classed as a necessity or high priority. However, even these businesses need to be prepared for the possibility that economic pressures will force consumers to radically alter their spending priorities.
- Inability to Borrow from Banks
In the event that cash flow becomes a problem, businesses may turn to borrowing money as a solution. However, this resource cannot be relied upon.
What we have already seen so far throughout the pandemic is that banks are very reluctant to lend money to businesses that face even a moderate risk of being unable to repay debts in the foreseeable future. While banks do need to invest, the upside of lending money to small and medium-sized businesses may not be worth the risk going forward.
This puts those would-be borrowers at significant risk. Businesses need to plan for the very real eventuality that they cannot rely on banks to prop them up when cash flow dips. They need to be in a position in which, if necessary, they can hibernate for a period without going under.
- Consumer Safety Fears
While there have been mixed reactions to the health issues caused by Covid-19, businesses need to be aware that safety concerns may very well heighten as the pandemic progresses. There are obviously a number of practical steps that businesses can take to increase safety measures (PPE, hand sanitizer, and protective screening).
However, although businesses can take all of these measures, the most important thing to be doing is to convey a brand image to customers that guarantees their safety. Larger corporations with more cash on hand have already done this effectively, launching advertising campaigns that sell their brand as one that can be trusted with consumer safety.
But it is important for smaller businesses to do all they can to convey this kind of image as well. This is no more than an extrapolation of the principle of providing good customer experience. However, whereas in the past customers may have tried out the customer experience of a particular business, in a post Covid-19 world they are likely to abandon the business altogether if they do not get a good impression to begin with.
- The Shutting Down of International Markets
Businesses need to be thinking beyond local markets and be aware of run-on effects of international markets shutting down. This is a stark reality that has already been faced by businesses in tourism and education industries. The breakdown of international transport links has crippled these industries and many businesses have already shut their doors as a result.
But this is not a worry limited to businesses that are directly dependent upon international consumers. For example, restaurants and cafes in university precincts need to be aware that cashed-up international students frequenting their businesses may be hampered by localized breakouts in Europe or Asia. Also, as consumer trends shift in foreign markets, this may have an indirect effect on price and availability of goods and raw commodities.
- Breakdowns in Supply Chains
At the start of the pandemic, fears in the collapse of global supply chains were acute. This was seen most particularly in supermarket shelves being emptied.
However, the supply chains that are most likely to actually cause disruption in the post Covid-19 world are those associated with specialized products. If a product is more specialized, it means the number of manufacturers are fewer. So, local lockdowns where these manufacturers are located may cause prices to become dramatically inflated or supply to disappear entirely.
To avoid this, businesses need to ensure that they maintain links with multiple suppliers of the same product. Diversifying supply routes will mean businesses can quickly switch to alternatives rather than setting up new trade relationships on the fly (where the manufacturer will have significant leverage in pricing).
- The Cost of Complying with Regulations
There are three primary aspects to the cost of complying with regulations. The first is the cost of instituting new equipment and processes for safety. This may involve purchasing PPE equipment or reorganizing shops and factories, for example.
The second aspect is the penalties that will come with non-compliance. Governments around the world are seeking to make examples out of both businesses and individuals who ignore regulations and the cost of fines is skyrocketing.
The third aspect is the very real possibility of increased lawsuits arising from regulations not being followed.
- The Shift to E-Commerce
Many businesses are going to fail in the post Covid-19 world if they are not set up for online trading. According to a survey conducted last month by personalization provider Qubit, two thirds of consumers have increased online shopping during the Covid-19 crisis and 35% will continue to opt for this method more than they did before the pandemic.
Businesses simply cannot afford to assume that consumers will return to old habits when restrictions are lifted and the pandemic ends. Consumers have already developed new habits of shopping online and there will be no reason for them to break these habits.
Businesses need to make sure they can reach their customers online or risk the possibility of losing them altogether.
The Seven Most Promising Opportunities for Businesses in a Post Covid-19 World
- The Opportunity to Go Online and Expand Customer Bases
Although it is a real worry for many businesses that they will be left behind by the online shift, they really also need to see this as an opportunity. Moving online is not online a practical necessity of reaching old customers, but also an opportunity to find new ones.
Launching or improving an online platform requires investment, and many businesses have been putting that investment off for years already. But with consumers avoiding in-person shopping and services, now is the time to be investing in a user-friendly online interface.
- Diversify Suppliers and Build New Commercial Relationships
Once again, this is an area in which necessity can be reframed as opportunity. Businesses need to diversify suppliers (not only of products, but also human resources and services) to avoid supply chain disruptions. But the resultant diversity should be a healthy boost for any business.
This is not only a way to maintain supply security, but also to look for better prices and products from different suppliers. B2B businesses are looking for new clients just the same way that B2C businesses are looking for new customers. This is an opportunity to introduce competition between suppliers and establish new collaborative efforts.
- Diversify Customer Base
Just as suppliers fail, so too will individual customer markets. If a business currently sells to very particular demographics, it needs to expand across more domains. But, once again, this is really only an opportunity to grow a larger customer base.
What this requires is solid market research, followed by establishing new marketing channels and undertaking necessary rebranding. Find out what your new demographic wants, work out how to reach them, and make sure your product is presented in a way that meets them on their level.
- Reduce Overheads
Overheads like rent and council taxes are what have really crippled business cash flow so far in the pandemic. These were seen as a necessary cost in the pre Covid-19 world. However, now might be a good opportunity to shed them altogether.
Renting a shop front or office space may be unnecessary if you move your workforce to a remote setup and shift your business online. A stripped-back workflow will increase profit margins in the long run, as long as performance standards are maintained. ‘Ghost kitchens’ or ‘cloud kitchens’ are a prime example of this.
- Improve IT Infrastructure
There are a number of different reasons why businesses are being forced to improve IT infrastructure at the moment. For example, digitizing workflows is essential if a workforce is interacting remotely.
But upgrading IT resources is something that businesses should be investing in anyway. This means finding software to manage supply chains and human resources, implementing a centralized data storage system, and improving customer interfaces such as mobile and web applications. If done correctly, all of these should work to boost profits and business performance, Covid-19 or none.
- Chances to Get Ahead of Specific Consumer Trends
Markets have never been more dynamic as they are now, which means there are many opportunities to lead trends rather than respond to them. Consumers are changing their behaviors out of necessity, but they are also looking to be shown new ways of accessing products and services.
In the past, trends were hard to predict and it was mostly larger corporations with market research budgets that could get ahead of the curve. Now, however, even local businesses can set up new initiatives that never would have been possible before. Successful examples so far have been home-delivered cocktails and remote exercise classes. The time is ripe for businesses of all sizes to innovate.
- Pick Up Quality Human Resources Being Offloaded Elsewhere
Many larger corporations are shedding their workforces, often to the tune of 25% or more. As these workers are let go, a wealth of human resources is flooding the market.
Businesses need to be seeing this as an opportunity to pick up quality expertise as more and more people search for jobs. It is best to pair this possibility with other opportunities on this list. For example, rather than outsourcing IT upgrades, think about picking up an in-house IT expert to innovate your business more affordably.
Challenge Is Opportunity
What these seven challenges and opportunities show is that there is not that much difference between the two. Almost every challenge being faced by businesses in a post COVID-19 world can be paired with a business opportunity that has been made possible by it. The key for innovating correctly will be to balance the cost of investment with the risk of financial uncertainty.
Necessity has always driven innovation and now is a time of great necessity.