I have had multiple people ask over the course of the Covid-19 pandemic, “how do businesses navigate through a pandemic like this?” This is an important question, particularly as there are indications - at the time of writing this - that Covid-19 related restrictions may not entirely be in the rear-view mirror, and there are also legitimate concerns by business owners that similar restrictions may be imposed for other outbreaks that may visit us in the future. In terms of how businesses can navigate through something like this again, it really does depend on the nature of the business, and so your particular situation would best be assessed through the lens of your business specifically. That said, I thought it might be helpful to briefly provide 3 general observations I had over the course of the Covid-19 pandemic, in terms of how different businesses were impacted by various government restrictions and actions.
1. There were Covid-19 related anomalies that kept some businesses on artificial life support.
Businesses often follow a life cycle which inevitably has an endpoint for many, and there are factors that may expedite this for some businesses over others (such as being over-leveraged, mismanaged, cash flow challenges, inadequate risk mitigation, scaled inefficiencies, etc.). There are a number of businesses I noticed that were on the verge of closing under normal conditions, as they normally experienced operating losses in regular business cycles, which ended up having some record profits over the pandemic. These profits were primarily (if not solely) a result of the Covid-19 related financial support programs from various levels of government. It allowed some businesses to survive a couple years longer than they likely otherwise would have. For businesses that may have found themselves in this situation, it would be prudent to address some of the underlying factors that drove prior year losses, as counting on additional government support in the future may not be the most sustainable business model.
2. For businesses that fall within the category that lately has been referred to as “non-essential”, it is essential to be prepared to pivot if need be.
I recall a conversation with a limousine service business owner who made the comment, “It’s not that there is a lack of demand for my services, it’s just that the government turned my business off.” If your business or industry may be at risk of being turned off in a future pandemic, it would be prudent to consider now how you might be able to pivot, so that you are better prepared to do so at that time. This may include (but is certainly not limited to) offering complementary products or services that would be less at risk in a future pandemic scenario, or perhaps finding ways to offer supporting products or services to businesses and industries that would typically not be at risk in a future pandemic.
3. Businesses that had a regular pulse on their numbers, and that had a strong understanding of where they stood financially, were well equipped to make the most of opportunities that came up during the Covid-19 pandemic.
There were new business opportunities that arose during the pandemic, as there were shifts in needs in the market, and there were a number of businesses that did really well in that context. If your business does not have a strong ongoing understanding of where it stands financially, it becomes difficult to make informed and strategic decisions to maximize these opportunities that may arise. Invest in the administrative systems needed to know where your business stands at any given time, and have the capacity (whether internally or externally) to quickly analyze potential opportunities. This will help to keep your business agile to make the most of future opportunities that may come up in your market, even if it might be in the middle of a pandemic.
Again, your approach to navigating your business through potential future restrictions and/or lockdowns will best be determined considering your specific business and circumstances. If you would like to consider this further for your business, please reach out.
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