Five business lessons learned from the COVID-19 economic crisis

In Chamber Blog by admin

It’s fair to say that 2020 has been a business challenge. In addition to the emotional toll the COVID-19 pandemic and its related remote work requirements, lockdowns, and other challenges have taken, many businesses now find themselves facing financial hardships and potential closures. All is not lost and if there’s a silver lining to be learned from recent events, it’s the following five business lessons that will help businesses emerge stronger than ever and better prepared for the next pandemic, recession, or government shutdown:

Lesson #1: Design a critical business plan to successfully operate during lean times. It’s worth taking the time to assess and plan out which aspects of your operations are essential during slow periods or, at an extreme, another shutdown, and which are not. All CEOs know that cash flow is vital, which is why a critical business plan should include a 13-week cash cash flow forecast. This forecast should be updated weekly and evaluate contingencies within the given time period. For businesses that lack sufficient cash flow, it may be time to secure a line of credit to ensure sufficient cash levels.

A critical business plan is not limited to pandemics. For example, government contractors may want to plan for a scenario where they lose a classified contract but need to retain valuable security-cleared employees for a future contract. Having a future cash position i place will give business management confidence that all of the business’s obligations can be met.  

Lesson #2: Eliminate the revenue roller-coaster. While it may seem insurmountable to some, stabilizing revenue streams is important to surviving business challenges. Businesses that rely on foot traffic, seasonally dependent events (e.g., summer break, holidays, etc.), or single large orders to generate the bulk of their revenue will struggle during bad times as they cannot predict when revenue will come in again (if ever). Tens of thousands of business owners have experienced this first-hand when their expected roller-coaster high didn’t come in. Unfortunately not all have survived. 

Business managers who don’t have predictability can create it by establishing diverse, recurring revenue streams. Signing long-term service contracts; creating a monthly service membership or product delivery subscriptions; or developing an online platform for providing instruction, or direct-selling online are all ways to stabilize revenue streams. This is a time for creativity and developing offerings that are logical business extensions. 

Lesson #3: Create a crisis communications plan for economic downturns. Uncertain times breed fear in business, which is why reassuring staff, investors, vendors, clients, and referral partners needs to be a priority throughout any business crisis. There are many options for delivering communications (email, social media, website, calls, intranets, invoices, etc.) that all have one thing in common: communicate early and often, even if management hasn’t yet developed the perfect solution. notes the number one expectation from employees is that their employers communicate effectively. Tuck School of Business communications professor Paul Argenti's recently published guidelines in the Harvard Business Review which offer excellent details, including the need for a crisis-response team and examples of clear communication steps for the various groups a business serves. 

Lesson #4: Innovate through remote work policies. The COVID-19 pandemic abruptly shifted many businesses to a remote workforce. It was sudden and difficult for many, which is why it is imperative that all businesses include policies for initiating remote work at a moment’s notice in their critical business plans. Creating a smooth transition process will keep staff employed, clients reassured, and contracts on-target. This is especially important for those companies which conduct on-site activities. 

Key to this transition is the ability to empower employees with the right tools to succeed from remote worksites. Technology tools like Microsoft Teams or Zoom will help team members stay connected and more robust benefits such as an allowance for a home gym will help staff members view themselves as valued members of a business team rather than merely an employee behind a screen.  

Lesson #5: Design creative solutions and transitioning for a win. If there’s a word everyone seems to have used during the pandemic, it’s ‘pivot.’ Pivoting meant more than adjusting where a workforce sits, it also meant adjusting service and product delivery systems and even the services and products themselves. Businesses that are surviving today may have retooled their offerings to meet current market demands (halting clothing production and instead making face masks, as an example) or taking in-person services to an online platform. That agility and creativity will not only help them through the current business challenges, but have also offered potential revenue streams moving forward.   

The pandemic-caused economic crisis showed how being prepared significantly removes luck as a factor in many businesses’ survival. These five lessons will help ensure that a prepared business will enter crises stronger, survive crises better, and continues on the path of long-term success. 

This member blog post is courtesy of Ryan Huss, Director of Operations, Parabilis