COVID-19 – Intentional Software Solutions Advice
Business Restructuring diversity
COVID-19 is having a devastating impact on economies, forcing thousands of businesses to close and leaving millions of people out of work. But even before the coronavirus first arrived, the global economy was in a recession – with high unemployment, low growth, rising delinquencies (on a corporate and consumer level), and the falling state of many countries going into debt.
The SME sector employs between 47% to 70% of Southern Africa’s workforce. How can these vital businesses sustain themselves through the pandemic, and what resources are available for them to do so? Here are some five practical tips for small businesses and entrepreneurs to help them survive COVID-19 and even thrive in what comes next.
1. Forget about the old rules
COVID-19 has had a devastating impact on the global markets, with capital drying up and it now being impossible to predict what the stock market will do from one day to the next. And even though businesses have survived the past 20yrs or so years, businesses have to change their thinking in a way that they have never had to before, and that this is new territory for all of us.
We are living in a different time to anything we’ve experienced in the past, and there is almost a lack of the appreciation of the moment we are in. The presumption that the previous methodology of how we did things needs to apply now is precisely what needs a rethink. So, if your business structure was built for a particular economy with a series of assumptions, that economy is no longer the case and those assumptions no longer hold. The only thing we can be sure of is that this is the new normal.
2. Be essential to your customers
When deciding how best to adapt your business during COVID-19, it helps to think about how crucial your offering is. For example, it was interesting to note that the companies that could continue operating during the initial phases of the lockdown were those that provided essential services. And even though everyone would like to believe that the work they do is essential, this clearly isn’t the case (at least as far as governments are concerned).
SMEs should reconsider whether they are critical to their clients or if they’re just, to put it bluntly, optional ‘frills.
As Intentional Software Solutions (ISS), we advise businesses that they either invested in digital systems or that they go through our accelerator programs for them to understand if they can ask themselves where they are on their client’s income statement. If you are in the ‘cost of goods sold’, then you are critical because without you, they have no goods to sell. But if you are in the SGA [sales, general, and admin expenses] portion of the income statement, then you are not critical because that is what they will cut first. So, the opportunity for the pivot is to ask yourself: are you an essential service to your customer? If the answer is no, then you need to start rethinking your business model.
3. Keep your best relationships
Comparatively, an entrepreneur and a small business owner, a small business owner is someone who owns a small business while an entrepreneur is someone who solves problems. Indeed, with COVID-19 is putting balance sheets under strain, now is also a good time to get creative with solutions. It also means being flexible before you cut the relationship off.
When your debtors / creditors who are business associates call, you have to be a little bit about the value of time. If you are not selling a simple product or service, you are looking at about a complex sales cycle of six to twelve months. Ask yourself: are you willing to forgo a relationship that you took a year to create because you are going through short-term crisis?
4. Do the hard work
As we move beyond the short-term uncertainty of COVID-19, SMEs can start thinking about strengthening their operations for the long-term. This means moving beyond the immediate money concerns.
When we started Intentional Software Solutions, one of the key bits of insight we learnt from our mentors was that money is usually only 20% of the problem; the other 80% comes from issues like technology, infrastructure, and so on. That is why it is important to begin to build support systems to help the businesses one is invested in. And almost every client that we supported and put a structural system solutions trajectory has either graduated from our accelerator programs, or is still in our support programs, has found out that the things we make them do – the things that they hate doing – is what is keeping them alive.
5. Build systems for the future
An example of the previous point concerns a transport and logistics business that we got involved in providing solutions, some years ago. It was run by a man in his early 70’s, who co-managed it with his sons. But even though they were generating over 6m USD a year, they had no pricing system at all. The owner would do all the costing manually, one client at a time.
After many months of trying to convince him to create what we call ‘the second brain’, in the business so that it could do the accounting, independent of him and, just in these hard times of the pandemic, the gentleman is happy and expressing how incredible it has been to be able to click a button on the system and have everything done.
and resources to help navigate this situation. You can also find out about support for Sage Conclusion
Ultimately, the only way to be ready for the next crisis (and there will be another one, pandemic or otherwise) is to make sure this one makes you stronger.
This moment is calling on all of us to look at ourselves – the way we think, the way we act, the way we buy, the way we add value – and think about how we bring that to the world. The question is: who will you be after this moment? You should be a better version of yourself.
..