How to rebuild your business after COVID-19?
Table of Contents
COVID-19 outbreak has not just weakened the health of humans rather it is worsening the economic growth all-round the globe. Big Corporates, MSME’s, MNC’s and the unorganized sector which are the drivers of the Indian economy are the ones worst affected. As per IMF statistics, the growth rate in Asia is likely to be stalled at 0% for the F.Y. 2020-21 which is the worst performance ever recorded in the past 60 years. Even during the times of global financial crises & Asian financial crises the growth performance of the Asian continent was 4.7% & 1.3% respectively.
Big corporates & MNC’s will revive and get their business back on track because they have the source to generate fresh funds, which will help their business to gain momentum again. But tough times will come for MSME, New company registrations & business in the unorganized sector. The only thing which differentiates between these two types of business venture is the source of funds they possess and the management of these funds.
Having a post-lock down strategic plan ready for your business will help to revive it from any major setbacks. If you don’t have a strategic plan for your business then it is the right time to think in that direction and revive your business from the effect of COVID-19.
Some points which need to be analyzed:
1. ASSESSMENT & IDENTIFICATION
Just as the doctor does before recommending any medicine to its patients, in the same manner, you must first diagnose the problem which your business is facing. Therefore assessment is the fundamental stage for the revival of your business. Check which area of your business is worst affected and find the best alternative solution for it.
Cost-benefit analyses of your business with the help of cash-flow statement, sources of revenue and cost of customer acquisition will help you to maximize efficiency in the acquisition and utilization of financial resources. Consulting a chartered accountant will help you to reduce cost and save taxes.
Not just sales, revenue, profit & cash flows but also consider non-cash measures, which has affected your business such as; stock loss, customer loss, loss of goodwill in the market etc. these factors should also be factored in while computing the loses.
2. RESTRUCTURING BUSINESS PLAN
The economy and the market will not be the same as it used to be earlier therefore it is imperative to bring some hair-cuts in your business structure. Analyzing the complete trend in your business industry will help you to devise a competitive strategy for your business.
3. ADDITIONAL FUNDS
Unless you have a large chunk of liquid funds in your business available, you need to figure out the sources through which you can raise the funds for your business. It is most likely that most businesses, MSME, Start-ups will face a huge shortage of working capital to kick-start their business. Since we know now that it’s a tedious process to get your business loan sanctions from financial institutions and the long duration it takes to get the funds in your hands, therefore it is advisable to get all these preparations beforehand so that when the time arrives you do not need any extra time to arrange those funds.
Various modes of funding through financial institutions are:
- Working capital financing
- Inventory financing
- Fixed capital financing
- Business lines of credit
- Other modes of financing
Even borrowing is competitive in the market and you cannot risk your business by borrowing funds from a non-competitive source. For example; suppose you have a loan from Bank A @10% whereas your competitor is having a loan from Bank B @ 9%. Even if you have a product/service of utmost quality you will not be able to compete because your funds are borrowed at a higher rate as compared to your competitor.
Every other option has different rates of interest applicable and each option have a different set of pros & cons attached to it. Let a financial domain expert and a chartered accountant who is also a provider of CA services online, decide this for you.
4. SPECIFIED TIMELINE
“Unless you have defined time-line, you will always be lack of time”. Prioritizing the work and setting a realistic timeline to achieve the goals is much needed in the times of COVID-19. Instead of taking the entire task, an ideal businessman should take step by step growth to achieve their business goals. Initially, your goal is to secure funds for your business and then only you can start your business operation so one must consider securing their funds as their priority.
During the initial period of COVID-19 recovery process look whether you are able to meet the specified timeline and check what is working in your plan and what needs modification.
5. CONTINGENCY PLAN
This pandemic seems more like once in a lifetime event but in a business, there are certain external factors which will disrupt the smooth functioning of your business. So before any such situation arises in future a rational businessman must start to establish some safeguards to prevent their businesses from future shocks.
Such as establishing liquidity provisions, increase your online presence; clear your debt as early as possible, cutting down non-essential expenses etc. By making these changes you can not only secure your business from future crises but it will also improve your business functioning in contemporary times. Prepare your business plan A, B, C until your business future is secured.
If your business is also reeling from the impact of COVID-19 then don’t panic, just follow the steps discussed above and even after that if you have any queries regarding your business or how to grow your business during the period of crises, feel free to connect.