Here’s a look at some invaluable business lessons that the entrepreneurs have taken away from the pandemic:
1. Be ready to improvise, adapt and overcome.
To meet the challenges posed by the pandemic, businesses around the world had to react in agile and decisive ways. For example, if you’re in the fashion business, maybe you should focus on manufacturing facemasks with style and selling them online.
Joel Lim, who has been in the event industry for more than a decade had decided to put his business on hold and pivoted to the training and education field due to the pandemic effect. He shared, “Prior to the Covid-19 crisis, things were looking bright for us. Being in the events industry for 10 years, we were quite stable and were heading for growth from 2020 onwards. All was sunshine and there was little economical disturbance for us.
Joel Lim, Event Industry
“In March 2020, every day we would receive notices from our clients to either cancel or postpone our projects, and by the end of the month, we were looking at zero sales for the next 3 to 4 months. That’s when things started going down south.
“With my experience and network, I decided to change my entire business direction to another industry which was a dream come true for me. It has always been something that I always wanted to venture into but didn’t really have the time to focus on. With the event business dormant, I could now conduct sales training and co-organise these trainings with other trainers to help SMEs prepare for the economic rebound”.
Image source: Wall Street Journal
Jermaine Bee, who co-founded The Ark Event Space with her mother, on the other hand, leveraged their business’s objective to diversify their business in the food industry. “The Ark Event Space aims to be a platform for people to come together, bond and build better friendships and relationships that matter through social gatherings, events, parties or simply to catch up over coffee! We started off really well in July 2019 with businesses flooding in, things were great and relationships were fostered through the many events organised.
“But things aren’t the same now. After much thinking, to keep afloat during such a time, we came to the realisation that we can still achieve our aim to build relationships through food and have decided to pivot our business to providing Care Package services to allow people to send love and happiness to the people that matter while waiting to be reunited when things are better again.
“We also spiced things up a bit recently with our collection of Penang Homemade Sambal/Chilli sauce that comes in Sambal Bawang, Sambal Belacan, Cili Hijau Jeruk and Garlic Chilli flavour.”
These business owners understood that the market context offered the opportunity to address new needs so they reinvented themselves to stay relevant to their audience.
2. Cash cushion is king.
In an emergency situation when your cash flow suddenly grinds to a halt, savings can be a lifeline. If your business doesn’t have one yet, you might want to start soon. Having cash savings you can tap into to cover operating expenses can relieve some of the financial pressure you might be experiencing. For instance, you may be less likely to lay off employees or default on business debts when you have the cash to fall back on.
Yes, the government is rolling out initiatives to help businesses stay afloat, but how far can it get you?
Jermaine, who received aid given by the government, shared that it wasn’t enough to sustain her business. She said, “We’ve had some help from the government with the one time RM3,000 cash incentive for start-ups/small businesses but the amount couldn't sustain us in the long run as we had a high rental and other necessary expenses to bear as well.”
Meanwhile, a nail salon owner in Tropicana, Petaling Jaya, who prefers to be known as Chloe, only had 4 months to run her business fully before the pandemic hit and now finds it tough to stay afloat because of financial constraints. She shared her experience with us: “Although the business did not enjoy much visibility, we had a strong digital presence and had a stable flow of clientele. We managed to become one of the official sponsors for Miss Grand Selangor pageants.
“Thankfully, we had cash reserves to use during the first MCO. We also managed to pull through by introducing really low-price packages that clients can utilise once the lockdown was lifted last year. This helped us to get some funds to make it through. But then came the second and third MCO, then FMCO and EMCO, it was really tough.
“As for government aid, I’d say that they didn’t address most of the micro-businesses. And, my business was just too unfortunate because our documentation (statement of accounts) wasn’t enough to qualify for the aid as we were very new. Right now, I’m digging into my savings to pay for the rental and I’m planning for closure to cut the losses."
As other companies struggle financially during times like this, those with huge cash cushions will be able to continue their operations and increase their market share, while focusing on being agile.
3. Build a financial contingency plan
All of the business owners that we talked to didn’t really have a solid contingency plan in place - at least not for a pandemic.
Gladys, who runs a large format printing company that has been around since 1986 with top tier clientele, finds that it will be hard for the business to recover once they’re allowed to operate again.
She said: “The pandemic did slow things down, but it started to pick back up early this year (2021) and then another MCO started again. We didn’t really have any Plan B as we have been supplying mostly for our existing clients for events, promo etc. Plus, online wasn’t an option for us.
“We did take advantage of the government aid. It did help a bit but we still need to pay part of the salary, rental, utilities etc when there is ZERO income. We thought we will just try our best to stay afloat, but things just don’t look good at the moment so we’ve decided to close temporarily. While waiting for the situation to recover, salary and machine maintenance still need to be paid."
This is why contingency planning is important. When things go wrong, the plan is there to prevent panic, salvage your business from your excessive loss and provide an opportunity to get things back on track again. The type of contingency plan you create should depend on the type of business and the location. In Gladys’ case, the contingency plan should rely on protecting those assets and anything that is required for driving income.
You can get ahead of the curve on emergency financing (as mentioned in point 2) by taking up insurance policies for contingency situations. Shop for insurance plans that have a reimbursement option for assets lost to natural disasters and any worst-case situation.
For example, Allianz Business Shield (ABS) offers various features and benefits for small-to-medium businesses according to their needs. Their flexible and customisable business protection plan is available for a wide range of sectors i.e. food & beverage, retail, service, manufacturing or wholesale industries.
Some of the coverages that would be helpful are the Inconvenience Relief Benefit (IRB) that will keep your business afloat with a daily cash allowance in case your business is interrupted by fire or other covered perils or notifiable diseases such as COVID-19, or the Profit Shield Benefit that provides your business with protection of up to RM2 million for loss in profit if you suffer damages due to insured perils like fire and even covers one-time costs for premise disinfecting service and test kits for employees in the event a notifiable disease manifests within the premises.
So, what’s next? Plan ahead, be prepared and stay well
Most businesses across all industries would agree that Covid-19 is a wake-up call to focus on survival and sustainability. We hope these lessons can help your business negotiate the unique position that the pandemic has thrust us all into. Although the crisis is still unfolding, it’s already clear that building resilience into your organisation’s DNA is more important than ever.
And, whether or not you’re prepared for a catastrophe, it can still happen. One way to protect your business against the inevitable is by acquiring business insurance. With unseen risks and uncertainties on the way, the financial consequences of a potential mishap could easily wipe out the assets of your business.
If you’re looking to protect your hard work and passion, Allianz Business Shield is one of the best comprehensive coverage out there that’s available for small-to-medium businesses. With this business insurance in place, there’s no reason for you to throw in the towel.
Rest assured that Allianz will have your back when times get tough by helping you minimise financial risks - especially now when things are still uncertain so that you can focus on being agile and bounce back stronger with confidence. CLICK HERE to find out more.
On a final note, keep positive, stay vigilant – and most of all, keep yourselves, your employees and customers safe.
*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.