Businesses must change or expand to survive COVID-19
Atul Bhakta, CEO of One World Express talks to us about how businesses need to seriously take action to prepare for the new world, post-pandemic.
No company could have possibly predicted the adverse effects of COVID-19. More important has been the way they have reacted to this crisis.
Although governments were quick to offer some financial assistance, most notably the UK Government paying 80% of the salaries of furloughed workers, it would be foolhardy to believe that the safest bet for struggling CEOs is to bunker down and silently ride out the storm.
Such an approach risks leading one’s company into ruin. This is especially true for smaller firms and startups, who rarely enjoy the same cash reserves that larger organisations do.
One World Express recently commissioned a piece of research to explore how business leaders have been reacting – have they used this opportunity to either pivot their revenues models or reach out to a larger customer base?
These latter two strategies are, in my opinion, the best ways that executives can ensure their businesses survive through to the other side of this pandemic. Thankfully, our research showed many have indeed taken such an approach.
How has social distancing affected SME growth?
Small consumer-facing businesses have faced ruinous drop-offs in customer interest, and many have had to resort to closing their premises until local demand returns.
Even enterprises have had to deal with COVID-19’s devastating affects across numerous supply chains – leaving them without any new customers to reach out to.
It is unsurprising, then, that our aforementioned research showed that 42% of the 900 businesses surveyed said that they have had to temporarily close since lockdown measures were introduced. Even more (45%) admitted that the pandemic showed them how overly reliant their companies were on one particular market.
Of course, there is nothing wrong with only being active in one market for one’s customer or client base. However, this virus forces decision makers to venture outside their traditional clientele in order to keep operations afloat and thriving.
When lockdown means your entire revenue model is now redundant, simply waiting until normality resumes means playing catch-up to competitors who sought new horizons whilst your company was staying frozen-in-time for months.
What these ‘new horizons’ actually consist of depends on the business and its service offering. However, for those selling physical products, overseas expansion has become much more popular in recent months.
Going global
A majority (57%) of the companies One World Express surveyed said that they were looking to expand internationally in order expand their customer base to survive COVID-19. Given that a minority (42%) of British companies currently sell goods overseas, this signifies a significant shift in their priorities.
As previously mentioned, pivoting one’s product or service is a positive action to take during these perilous times. Of the businesses surveyed, over two fifths (43%) said that they had made changes to their service offerings to better suit current customer needs. And almost a quarter (24%) said they had pivoted their entire revenue model to sell to a different, more available, demographic of customers.
Read More: 6 Reasons technology will help society overcome the COVID-19 pandemic
All the above statistics represent a positive change in the UK private sector’s thinking. The plight of COVID-19 may have done untold damage to the economy, but these findings show that it seems to have opened up the minds of entrepreneurs nationwide to the benefits of overseas operations.
Will this remain the same once the virus is contained? Or will coronavirus spell the end of globalisation as we know it, as some commentators have suggested in recent weeks? The answer, in my opinion, is more optimistic than others may have you believe.
New targets, new markets
Global trade has undeniably taken a hit from the pandemic, primarily due to the complexities of minimising virus contagion. The World Trade Organisation recently confirmed as such, citing the closure of manufacturing, construction, and car dealing premises as contributing to a notable decline in exports worldwide.
These immediate challenges will undoubtedly lead to more lasting changes, primarily in how these sites will operate once operations begin again. Yet this does not represent a long-term decline in the levels of international corporate interconnectedness that global trade has facilitated the rise of over the last 50 years.
Even so, small businesses should engage in a cost-benefit analysis when it comes to accessing different international markets. The cost and complexity of exporting should be compared against the potential market cap of a new customer base in any given region. But fears of making the wrong choice should not dissuade small firms from exploring such possibilities, given that lockdown measures in the UK look to be extended throughout much of 2020.
Thankfully, One World Express’s study shows that this message has been received from many in the UK business community. Do more need to take this initiative? Almost certainty. But in discovering which businesses are able to seek out new opportunities during these trying times, we will hopefully enjoy the innovative strategies implemented for many years to come.
