Since recording the index case of Covid-19 in Nigeria in February 2020 and the spill-over impact from countries already impacted, businesses in Nigeria and the economy at large has faced massive economic shock that has made planning for the next normal increasingly necessary and somewhat complex.
Consequently, looking inward and some conducting some key stress testing can bring the much-needed guidance on the next steps to survival.
It is no gain-saying that the global economy is currently facing a major crisis that could get complicated or get prolonged than projected. With partial lock-down and restrictions, social distancing and isolation being the preventive measures put in place to curtail the spread of the seemingly escalating pandemic; hotels, parks, malls, supermarkets, stores, non-essential markets and several local businesses and companies are being forced to shut down.
As an entrepreneur or business owner, what does this mean for your business? How do you keep your business afloat at these times? There is no denying that many businesses and companies will struggle and perhaps suffer a profound blow here.
Here are some tips for your business to consider at this time:
Be patient in securing investments
Ensure to keep some liquid cash and be careful about short term investment spend this period as the market volatility and dynamics appear uncertain for making profitable predictions.
Separate wants from needs
Given the downturn in business flows, and revenue shortfalls leading to lay-offs, and thousands suddenly becoming unemployed, businesses should reevaluate spending. The key is to eliminate non-essential spending.
Take advantage of a line of credit or government interventions
Having a line of credit provides a fall back should your emergency cash deplete. Due to the economic devastation wrought by the pandemic, government is offering interventions to businesses and households, and banks and other lenders are taking steps to make lines of credit more widely available. For example, the CBN through NIRSAL MFB provided N50billion Covid-19 intervention support to businesses and some banks have offered payment deferments for small businesses needing a line of credit.
Tracking expenses against the revenue status
At this period of pandemic, it is of utmost importance for businesses to conduct a proper assessment of their fixed and variable expenses as well as the actual revenues. This assessment will give a clear picture of where a company stands financially and help the entrepreneurs in planning ahead in the current disconcerted market. This strategy can be implemented even when the pandemic effect settles.
Checking the feasibility of the business model
Given that the market is changing every week (and for the worse), it is imperative to reconsider the business model and reassess where your business stands as per your assumptions concerning the revenue and cost. This is also a crucial time to track current financial metrics and cash flow. Be mindful of what your runway is. Businesses need to evaluate the impact on new sales, collections, credit cycles and potential bad debts.
Plan policies for next 3 months/ 9 months/ 18 months
Given that, it is difficult to assess how long this epidemic will last, it is important to be prepared for all scenarios. If we consider it as a 3-month problem, an instant halt on variable expenditures like hiring, marketing, travel, etc. can help. However, if the crisis continues for 9 months to a year, entrepreneurs will have to reconfigure their business strategy to reduce the variable expenses, renegotiate fixed expenses like rent.