Nathaniel Hartmann, associate professor of marketing, shares seven business tips to help companies adapt to the changing business environment due to the COVID-19 health crisis.
Prepare for different futures. Business owners and managers often make decisions based on what they predict the future will be. Instead of the owner or manager preparing for what they believe is most likely to occur, preparing for different scenarios can help business owners and managers prepare for whatever unfolds. Business owners and managers, can, for example, think of a best case, expected and pessimistic scenarios, and consider how their company’s well-being and decisions should vary for each.
Reduce cash burn rate. Cash burn rate is the speed at which the cash reserves of a company are used up. What sets the COVID-19 health crisis apart from many other unexpected events is that we do not know when the bottom will be. Business owners and managers can extend how long they can maintain operations by reducing cash burn rate by renegotiating recurring expenses (e.g. rent), canceling unneeded services (e.g. cable) and deferring payments for offerings rendered (e.g. opening and using credit card accounts with zero interest for 21 months).
Generate money today for services provided in the future. Business owners and managers do have options to generate immediate money. Gift cards generate money today for offerings rendered in the future. To motivate gift card purchases, offer a discount. Business owners and managers can also offer discounts or additional contract length as an incentive for paying up-front. For example, a landlord can offer a tenant two months free of charge, if they extend their lease and pay for 12 additional months up-front.
Pivot to different value propositions and offerings, as needed. Customer preferences and needs are changing in response to COVID-19. As a result, business owners and managers can recognize that value propositions may need to change, and the appeal of some offerings may decrease (or increase). For example, customers may increasingly favor lower risk offerings and make more utilitarian (i.e. practical) vs. hedonistic (i.e. pleasure) purchases. Furthermore, business owners and managers can recognize that the set of knowledge and skills their employees have may potentially be repurposed to serve the company and social good (e.g. some service employees can be repurposed to grocery shop and deliver food to the elderly).
Support employees and maybe add new ones. Employees are experiencing greater physical and mental stress, which can impact their ability to perform tasks. There are also technological challenges and shifting customer needs impacting the extent to which customers are purchasing. In response, business owners and managers can temporarily adjust workload performance expectations. Business owners and managers can also provide additional support to employees through increasing reassurance, accommodations, awareness of support options, and frequency and thoroughness of updates on business operations. They can personally contact employees more frequently to offer support and assess their needs, states and concerns. At this time, many business owners and managers are reducing jobs. While this may be understandable, it creates an opportunity for other business owners and managers to invest in their company’s future by hiring competent employees only available because of COVID-19.
Mind, prioritize and add to your customers. Customers are also experiencing many challenges. Business owners and managers can maintain and strengthen customer relationships by responsibly updating customers on business operations, changes to offerings and an order’s status. Business owners and managers should ensure that fair pricing and negotiations are practiced, despite scarcity of alternatives. In addition, segmenting customers and ensuring that higher priority customers receive greater proactive contact can be helpful to maintaining and building the most valuable relationships. There is also potential for business owners and managers to increase customer share of wallet or add long-term customers whose purchasing patterns have changed as a result of COVID-19 (e.g. now grocery shopping at one store instead of several stores).
Transition to digital, securely. COVID-19 is mandating that many companies increase the scale and scope of digital technologies. Business owners and managers should ensure that employees who will be supporting any shift to digital have the technology and skillset to do so. Business owners and managers may need to provide such technology and educate both their employees and customers on any digital operations. Regular contact with employees and customers can help business owners and managers transition effectively and efficiently. Business owners and managers should ensure that appropriate cybersecurity packages and processes are in place to minimize any security vulnerabilities.