Business Lessons From COVID-19
When business is good and the economy is humming along, business owners have little incentive to change their operations or strategy. But a new crisis has a way of magnifying existing problems. As COVID-19 abruptly ended America’s longest period of continuous economic growth, weaknesses in many companies’ business models became hard to ignore.
Coronavirus-related business shutdowns and other disruptions are expected to cut global economic activity by more than $1 trillion in 2020 alone, according to the World Economic Forum. It’s hard to calculate the long-term toll.
Along with its challenges, the pandemic has also revealed some important lessons for businesses. Learning from them now can help your business adapt to today’s quickly changing marketplace and help you correct any business weaknesses that the economic downturn brought to light.
Digital Transformation Shouldn’t Wait
It’s true that adopting new technologies requires a significant investment – and a major cultural shift for employees accustomed to the old way of doing things. But businesses that fail to take advantage of more efficient digital tools and online platforms may struggle to keep up with their customers.
Here are some ideas on how your business can embrace new technologies:
- Enhance your sales efforts by adopting digital sales tools such as a cloud-based customer relationship manager (CRM) to manage your sales pipeline more efficiently.
- Streamline internal communications and project management. In times of rapid change, and particularly in larger organizations, a healthy flow of information and strong collaboration supports quick decision-making and better insight.
- Create a more robust website and boost your online presence to protect and increase your market share. Business restrictions due to COVID-19 spurred many businesses to make the transition to e-commerce and other new delivery channels.
- Give your customers more ways to pay – such as contactless and online payments – to keep pace with changing consumer needs.
- Adopt new technologies to automate many tasks that you’re currently doing manually (such as certain administrative functions), so you and your team can focus on more important work. Since payroll is typically the largest expense for businesses, accounting for up to 70% of costs, you want to ensure you are maximizing your investment in your staff by minimizing unnecessary work.
Global Dynamics Affect Local Businesses
As we’ve seen, international events can hit close to home. This is especially true when it comes to your supply chain. Now’s the time to take a closer look at your existing supplier base, look for potential vulnerabilities, and identify ways to protect your business from potential disruptions.
Remote Work Is Here to Stay
Up until recently, remote work was relatively rare. But with the onset of COVID-19, more than 50% of all employed Americans transitioned to working from home, according to a Harris poll.
While many jobs can’t be done remotely, professionals are showing an increased willingness to continue working remotely at least part of the time. This could create opportunities for businesses to reduce expenses related to their workspace. Finding ways to support the efficiency and quality of remote work is a challenge many businesses will need to confront.
Goals & Budgets Need to Be Rethought
As economic uncertainty and industry changes remain a reality, there may be a continuing need to monitor and adjust your business and/or departmental budgets.
Remember, a budget isn’t just how you allocate funds. It’s a reflection of your priorities. Budget decisions should be supported by a well-informed strategic plan and financial forecast based on past performance.
Emergency Planning Should Be a Priority
Having the resources and flexibility to weather major storms requires good planning. Make sure there’s a plan in place to help you tackle the next major challenge you may face, such as supply chain issues, the loss of a major client, revenue decline, or damage to business property or equipment. The Small Business Administration has some helpful guidance on creating a robust disaster recovery plan and business continuity plan.
The recent downturn also highlighted the need for businesses to have extra cash in reserve for worst-case scenarios like a prolonged business closure. When possible, start building up your emergency fund, and make sure your savings are easily accessible and earning a competitive interest rate. A business money market account may be a smart choice. If your business savings exceeds $250,000 (the maximum per accountholder that is FDIC-insured), look into an Insured Cash Sweep solution for additional protection for all your deposits.
Working Capital Should Be Close at Hand
Another important part of emergency planning is ensuring you have access to additional cash to sustain your business in case of an emergency or temporary cash flow issues. If your business is impacted by an unforeseen problem like supply chain disruptions or a business closure, having a line of credit with your bank will provide an important safety line.
Even if things are currently going smoothly for your business, don’t wait to secure a source of working capital, just as a precaution.
The Local Business Partner You Can Count On
As you adapt to the business world’s “new normal,” supporting your financial strength is as crucial as ever. At Ephrata National Bank, we’re here to help with a full range of banking tools and flexible business financing, along with a commitment to our communities that goes back to 1881. Learn how we can support your business by contacting our team today.