How to save your business in Ukraine: practical advice to entrepreneurs
In trying to stand up to the common enemy of Covid-19, businesses are looking for new ways to preserve their liquidity and place in the market. Worldwide governments are trying to support entrepreneurs by introducing compensations and incentives for companies and their employees. The Government of Ukraine is also trying to help national business, but so far the only really effective support tool — tax holidays — remains only plans. Therefore, companies need to understand how to resist quarantine on their own.
- Accept the way it is now. The first and most important thing that the owner should do is to realize that the crisis will not end a week after leaving the quarantine. And even a month later. It is necessary to build a work plan based on the fact that according to the optimistic scenario, the world business will return to normal and resume the process of international trade around the beginning of the third quarter of 2020. This is if the regions in which the “corona” is now raging can stop the spread of the disease by the summer. Otherwise, if the disease can not be tamed and the world will stay under the quarantine lock until autumn, it is extremely difficult to make predictions. Therefore it is important to plan work in conditions of crisis and to allocate resources “with reserve”.
- Minimise the cash flow gap. This is one of the biggest risks that requires careful monitoring. In order to reduce the threat, it is necessary to implement system forecasting and redistribute cash flows. If there is a threat of a gap, try to revise the payment terms by agreement with contractors, suppliers and lessors. The postponement will really help to keep the company afloat. Remember that the forecast of cash flow in a crisis is the main management document of the owner.
- Marketing and sales are the focus. Optimize your costs, but do not reduce marketing and sales system as now, more than ever, you need to upgrade the effectiveness of all tools to attract customers. They must be accurate and aggressive. Only those companies that can competently build a sales funnel will survive the prolonged crisis. The processes are clear: for B2B we do strong analytics and accurate processes of finding potential customers, for B2C we tighten the system Internet marketing.
- Adapt your business model: Analyze how much market volume has decreased and how it can change after quarantine is completed. Analyzing the dynamics in the crisis of 2008 will help to understand the behavior of the market in extreme conditions. Develop a product line that will allow you to maintain positions and grow in a new market situation, or adapt existing products so that they increase your competitiveness. For an illustrative example, you can see how we managed to adapt the audit to the conditions of quarantine in Kreston GCG.
- Analyze and optimize costs. Conduct a ranking of costs. In category I: take the vital for the existence of the company, in category II: indicate the costs of the secondary value, and in category III: fix the auxiliary ones. In case you see serious financial problems on the horizon, reduce costs, starting with category III. If this does not work, analyze the importance of positions — unfortunately, the crisis forces many companies to reduce. But do not get carried away and do not think that by reducing 60% of the state you will avoid all problems and the crisis will pass you. Chaotically getting rid of staff you risk losing a valuable resource — trust and loyalty of employees, and it will never be possible to restore it.
- Control the funding. It is already clear that access to loans and financing will soon be at risk of deteriorating, and you should not rely on new external revenues. Therefore, we recommend that you conduct a dialogue with your bankers and discuss the possibility of opening or expanding credit lines. Talk to the shareholders and find out if they are ready to invest in the business in case of a strong decline in sales or bank failures. This must be done in order to confidently build a strategy of work and know your “backs”.
Any crisis is a natural selection, cleaning the market from weak companies. Whether your enterprise will survive the quarantine period and its consequences depend only on efficiency of management decisions and quality of anti-crisis strategy. When you take control of panic and learn to balance the storm waves of the market, you will open new opportunities for development. Use quarantine to tighten Internet marketing and sales management skills, test new technologies and increase personal efficiency.