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Business After The Pandemic

The life after the pandemic could be very different. As businesses start to open, business fundamentals would look very different than before. Few critical things which would change are

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If you have a Small & Medium business, the biggest question is how does the world change in the aftermath of this COVID crisis. In this article, I discuss the big shifts which could happen and how best to prepare for them?

There is adequate reason to believe that It will could be a long drawn battle of a year or more till a vaccine emerges or significant proportion of population get infected and get the ‘herd’ immunity. IMF estimates that the global economy would probably shrink by 3% during 2020, marking it to be the biggest downturn since the great depression of the 1930s. The forecasts for India are equally disheartening, a host of other international agencies have cut India’s growth forecast to be in the range of 1.5% to 2.8% - probably the slowest in past 30 years.

What does it mean for your business ?
With most businesses, big and small, shut for almost a month now, the economic losses are growing by the day. In a worst case, the cycles of shutdown and opening up will continue till mid of 2021 leading to a huge loss of lives, employment and value creation. And even in the best  case, if things open up soon,  we have already lost around 40 - 60 days of productivity – almost 15% of your annual sales. Besides, the obvious fall in profitability, a closure of a couple of months would bring in other problems for a running business. It seriously disrupts business planning, working capital , inventory planning and supply chains.

How does the future look for your business ?
The life after the pandemic could be very different. As businesses start to open, business fundamentals  would  look very different than before.  Few critical things which would change are

a) The price – benefit equation of the customer would change. The customer would hold on to cash and purchases. There would be new emotions of uncertainty, fear and anxiety impacting consumer’s buying behavior. The definition of necessity and luxury would change . The brand loyalties would change. The size and the mix of the consumer basket as well as the position of your product in her basket would change .

b) Lower growth rates would adversely impact disposable income leading to a demand side constraint. As growth goes down, the disposable income would reduce and so would be the discretionary purchase. Almost everyone would get pushed down the pyramid of income. Those already at the bottom would risk getting pushed out to no income. The number of customers wanting to avail your products would get reduced for most of the commodities.

c) The reduced demand would result in excess capacity, excess distribution and excess competition. It would become a fight for survival for many businesses. Few would become desperate and would adopt reckless approaches to defend their business. With stressed cash flows, severe working capital stress, excess & incorrect inventory, the profitability pressure would lead to dumping and severe price discounting. The ability to command a premium for brands would go down drastically as price would become the primary driver.

d) The supply chains would become more uncertain . The fluctuating demand on one hand and the hampered manufacturing on the other, would lead to unstable supply chains. In today’s well connected manufacturing world, there is a high level of interdependence. One single supplier unable to supply one single component due to one particular district under blockade would halt all your shipments. You won’t always get what you have ordered and would not be able to supply what has been ordered. A disrupted supply chain would take a long time to stabilize back to the new normal.

So, what to do ?
While the challenges are enormous, businesses cannot afford to lose this precious time. It is of paramount importance, that while the health crisis needs to be kept at bay, businesses should plan and prepare for life after pandemic . The first thing is to acknowledge and accept the chaos and plan for it.

Social distancing protocols would continue for some time to come. You will have to realign your processes to accommodate these.  The rosters, the shifts and work flow would change to accommodate the social distancing protocols. Few departments would be working from home for many more months to come. Safety and sanitizing protocols would have to be added in all your interactions with employees, partners or customers.

The customer, who was always a king would become a “bigger king”. The habits and behavior would change. The needs would change. It would become extremely important to know your customer. You would have to invest a lot more on market researches, panel data, customer level analytics, customer feedback and customer relationship management to stay close to your customer and his changing mindset.

Your business planning and forecasting models would need a complete overhaul. With a stressed cash flow, you won’t have the luxury of keeping high inventory to avoid a missed sale. Ability to precisely forecast the future would become a key attribute. Unfortunately, it would also become a near herculean task as your past period models would fail. The age old wisdom that past is the best predictor of future would not work. The disruption would corrupt your past for many years to come. You would have to invest into newer algorithms and take more inputs ( very near sales trends, sentiment analytics, buyer behavior research etc.) into  your forecasting & buying models.

E-commerce and omni channel would greatly advantage from the shutdowns . Customers would want avoid crowds and stores for some time to come. They would expect your business to go omni channel and would shift loyalties if you don’t. Besides building a website, E-commerce is a highly data centric and analytical business. You would have to acquire or learn additional skill sets to manage an e-commerce business.

In a more digitized world, you would require new & additional skills in your work force. E-commerce, web analytics, digital marketing, demand forecasting, data analytics would be the areas of future.  It would be a good move to retrain and retool your staff in these new technology related skills. There are a lot of “do it yourself” videos, free and paid online courses on these new world business management tools. Identify those who are eager to pick a new skill and encourage them ( even pay them ) to take these courses and learn to navigate the tight ship in the days to come.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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business global economy

Manishi Sanwal

The author is Co-Founder and Managing Director, Voiceback Analytics

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