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How to Manage Business in the midst of Covid-19 and it’s impact on businesses

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The current global pandemic of Covid-19 has come with increased global business and economic disruption and uncertainties. The impact on business include increased workplace regulation (which comes with a cost), travel restrictions, reduced customer spending, delayed investments, disrupted supply chains and uncertainty in the financial markets. This pandemic has brought a crisis across the Economic, Health and Social safety sectors. Its effects are worse than the global financial meltdown of 2008 which majorly affected the financial sector. The effects of the Covid-19 are also worse than the 1918 Flu since in Kenya it mostly affected the Coastal region causing social-economic disruptions there unlike the current pandemic which has affected the whole country and all the sectors. Thus, the pandemic requires a global and local approach to help business recover faster from the pandemic.

 

Whereas the pandemic has affected all spheres of life i.e. economic, health and social, the ripple effect felt in the financial sector and especially in debt and liquidity management is worse. Most companies will find it difficult to adapt and must find ways to continue funding their activities. The confinements imposed on the populations have greatly affected tourism, air transport, physical business (retail, wholesalers), sports, hospitality industry, education as well as transport.

 

How organizations move to quickly adapt to the crisis and the solidity of their financial structure will determine their resilience and bounce back despite the crisis. Some sectors will actually benefit from the crisis e.g. the digital space/platform while others will face a total shut down never to recover again. Companies must devise ways in the digital space to remain relevant to their customers eg can wholesalers take online orders and deliver goods to their customers, financial institutions can move to offer loans on online platforms, schools can offer online engagements between their students and teachers. This will not only bring about relevance but also ensure business continuity. This is what adaptability is all about to businesses.

 

Diversification is also another key proponent that will ensure that businesses are able to withstand the impact of Covid -19 e.g. schools can come up with a booklet that has topics to cover and questions for the pupils and sell it at a small fee just to ensure there are revenues streaming in. If in textile factory are you able to quickly diversify to what is in demand at the moment. It is the ability to adapt that will help your business come out of this crisis stronger.

 

Partnerships and collaborations are key as no business thrives in isolation. If there is time in the entrepreneurial world that we have seen enterprises partner with each other it has been during this pandemic. We have seen companies even locally working on modalities on partnering their way into helping each other navigate the COVID-19 pandemic.

 

As an entrepreneur you need to look for companies or businesses that you can partner with to offer solutions, services or goods that are needed by the markets. There is so much value addition that can be actualized if companies come together. Through partnerships companies can pool resources that can help cushion them during such times and improve on their liquidity.

 

In this unprecedented slump and confusion, it is essential that companies and sole proprietor businesses define credit management, sales terms and debt collection management as absolute priority. This will ensure that the key component of the business which is LIQUIDITY is maintained at acceptable levels. To prepare strength and preserve businesses in the current pandemic whether in the financial sector or others, the following measures would be important:-

  1. Dialogue and engage in agreements with customers and if necessary, make a payment plan.
  2. Each customer, whichever the size of their business, each invoice whichever the amount should be actively managed.
  3. Contact your customers to obtain promises to pay and also take into accounts difficulties in payments. Be empathetic but firm.
  4. In a worst-case scenario anticipate the risk of insolvency and think around alternative diversification.
  5. Be present with your customers by continuously engaging them.

Any business or organization should have in place a crisis management plan that will ensure its short term, mid-term and long term results are achieved as well as address employee well being, brand reputation, finance management, supply chain and any legal issue that could arise thereof.

Business proprietors have to strive to build more mental strength that will help them through these difficult times. Start by making your mental health a priority during times of high stress and uncertainty.

Find coping measures like talking and sharing your challenges with your friends, family and professionals in your industry, peers etc. This is key to helping manage your distress during this pandemic.

The key proponent in a business is liquidity thus how any businesses manages liquidity this time will determine the survival of such a business through the Covid-19.

Compiled by Anne Karanja.

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