COVID-19: Preparing Organizations for the New Normal
The coronavirus has left a massive impact on people’s lives. It has also led to significant economic turmoil, forcing countless businesses to close. Despite the unrest, this epidemic is going to pass, and when it does, businesses and organizations can get back on track.
But, by then, the market will be flipped upside down. That’s why organizations must be ready for the “new normal.”
Businesses that relied on frequent travel, hotels, and tourism are taking a downward spiral. With the constant traveling restrictions, corporations and workers are forced to rely on virtual conferences and digitize their services.
For this to change and the traveling industry to return to normal, companies need to accommodate their services.
Let’s take a closer look at the ways COVID-19 will impact businesses in different sectors. Including the best possible ways for organizations to react and prepare for the changes to come.
The Epidemic Impact
The global supply chain has undergone a complete overhaul. Millions of people have lost their jobs, and countless can’t pay off their debts and credit cards. Even though the restaurant industry is slowly getting back on its feet, it’s still impossible to pay off the rent or take leases.
Based on research, there’s a constant rise in credit risk, which has led banks to deploy new configurations. These burdens have left borrowers with financial difficulties, taking the rest of the business sectors with it.
People have less money to spend on luxuries. Instead, they focus all their income on necessities that will help get them through the day. This has completely disrupted the supply chain.
Here’s how experts believe COVID-19 affected each sector based on the industry from November 2019 to May 2020.
The research shows that the only sectors earning a steady profit are the healthcare and technology industry. The rest, including energy, telecoms services, and the finance industry, are experiencing massive losses.
The travel industry is the most affected. With losses estimated at $250 billion. It will be exceptionally hard for airlines, hotels, and tourist agencies to get back on track. Here’s a detailed analysis of the percentage drop in revenue for airlines from 2019 to 2020 based on regions.
Europe has the highest percentage drop of 46%, with a loss of $76 billion. But, the most affected is the Asia Pacific, with over $88 billion in losses. This has left many in the tourism industry without a job to come back to.
6 Crucial Areas to Focus for a Business to Prepare for the New Normal
Since the pandemic is affecting industries in various manners, organizations need to find the right way to respond to the crisis. So, when the epidemic passes, they’ll be able to reap the profits. Here are the six key areas they need to focus their attention on.
Crisis Response & Management
Around two-thirds of companies have already prepared a crisis management team. Their goal is to evaluate the demand and make short-term decisions that will help the company.
Over 50% of businesses have already alerted their consumers about the probable delay in shipments and product shortages. At the same time, 43% have drafted an allocation plan that will deal with the already manufactured products.
Experts believe it is normal for organizations to want to allocate their products. They will need to shift their network and adapt to the changing market.
But, most of the currently available crisis plans are not equipped to handle the COVID-19 aftermath. It’s very difficult to predict the possible variables, which has made management even more challenging.
What companies can do is:
- Search for insight on possible strategies they can capitalize on and cope with the transformation.
- Leverage their teams responsible for crisis management to assemble a future course of action.
- Focus on bringing employees back to the office by taking proper actions and adequate response efforts.
For entrepreneurs confident enough to set up a company now in Singapore, it would be a good idea to check with Singapore incorporation services and see whether or not they fit the requirements.
While it might sound challenging at first, a business consultant can help companies overcome these difficulties and respond to the crisis efficiently.
Protecting the staff should be a top priority. They will need emotional and physical support after the pandemic passes. Businesses have already implemented proper hygiene and health measures to make the workplace safe for staff and clients.
Because of the virus, more than three-quarters of businesses have canceled their conferences, face-to-face appointments, banned their employees from entering company grounds, etc.
While it may work for a short while, organizations need a strategy that can tackle the aftermath in the long run.
The best way they can achieve this is for everyone in the company to talk openly about their problems. Otherwise, the uncertainty will take a toll in the office. The employee’s confidence rate may plummet, which can affect the productivity rate.
With effective communication, workers can come up with efficient responses and policies that will help the company stay on its feet. This will keep the continuity at work and distribute the resources effectively.
Once the basics have been covered, it’s time to assess the staff costs. In other words, it’s essential for an organization to balance out its potential spending and cut costs. The goal is to keep the staff employed, but find a proper tactic to manage the resources.
That way, the company will be on the right step towards recovery. Once the market stabilizes, they can create new business strategies.
The coronavirus has a ripple effect. Statistics show there are constant fluctuations in supply, demand, and sales. The graph below illustrates the impact of the pandemic on the supply chain. Its current effect and estimated impact in the near future.
This has made it very challenging to mitigate distributions, assess the market, and control the supply chain. Demand and supply are expected casualties with the ongoing crisis. It’s normal for the effect of the virus to manifest itself in countless shortages, whether it is manufactured products, raw materials, or other components.
If the epidemic continuous for a long time, the shortages will only get worse. Companies will have trouble boosting their sales. As a result, it’s crucial for them to make the right response to tackle the problem.
What they can do is:
- Find a completely different supply chain scenario for wider coverage (more territories and better market).
- Modify allocations to the new cost strategies and customer demand (whatever the people want).
- Activate raw-material substitutions.
Organizations can hire a business consultant if they have a hard time picking out the perfect scenario.
With constant financial uncertainty, companies need to understand corporate tax and regulatory systems. This is important now more than ever.
Their corporate tax must function based on the political, societal, and economic context in the area they work in. Without the right decisions, the company can’t move forward.
What businesses can do is:
- Control their corporate tax efficiently.
- Get help from the government if necessary.
- Brace the unpredictable revenue.
- Try to be flexible.
It’s normal for income to drop. The pandemic has resulted in a massive cash flow reduction. To get ahead of the problem, companies can prepare for a worst-case scenario and draft a financial plan. They can track their liquid assets and revise them as much as possible.
Another viable option is saving the cash they already have to focus it later in funding. This will increase their revenue when the market is stable. Some countries have already implemented local measures to ensure businesses get relief from tax provisions. This could be a handy tactic when looking to save some cash.
To prepare for the New Normal, companies have to think outside the box. That means softening the impact of the pandemic and emerging a lot stronger.
That is possible if companies:
- Profit from learning financial modeling, scenario planning, boosting resilience, and adding completely new models in their business that can help them stand out from the market.
- Focus all their attention on their customers. What they want to buy and invest in.
- Shifting the trade to the core markets in the industry can be a viable strategy.
- Consider using the latest technology. A digital transformation is essential if companies want to grow in the industry. This will take some time and effort, but it’s a worthwhile tactic.
It’s impossible to know how bad the aftermath of the epidemic will be. Whether it’s on one’s health or the economy. What’s important is that businesses are prepared to handle the risk. Executives must manage their investments and focus on their resilience-building capabilities.
The impact of COVID-19 will teach everyone in the industry that nothing can run smoothly forever. The goal is to try and survive in this critical time and do whatever is necessary to stay afloat. The tactics listed above can be used as a possible stepping-stone to success.