The COVID-19 global health crisis poses a multitude of challenges for every entrepreneur. Experts in some economies predict that in the coming recession, up to 40 percent of all businesses could cease to exist. Virtually every business owner is affected by the crisis this way or another and many feel a deep need for orientation in this difficult time.
Here is how those who have succeeded approach the COVID-19 crisis and the three steps they take to thrive nevertheless:
1. Stabilise your business.
The first rule in business is: Don’t go broke! Also, in the crisis, the first and most important goal is to stay in business.
The COVID-19 crisis shows up in its first phase as a liquidity crisis. For business owners, it’s critical to keep liquidity. You don’t want to be in a situation where you are forced to sell your assets. To achieve that, you need to be flexible and quickly adapt to changing conditions. Innovation and the use of new technologies can help you achieve that.
In hard times, it is wise to reduce your dependency on financial institutions. Many billionaires have no debt in their companies or they want to reach zero debt soon.
No business can exist without customers. In a deep recession like this one, it’s not enough to think only about the financial condition of your company. You also have to think about the financial condition of your customers. You want them to survive so your company can survive. Sometimes you need to give them better business terms, give them more time to pay the obligations, temporarily waive the interest or even forgo part of the debt. It may be painful in the short term but it may save your company in the long term.
2. Prepare for opportunities.
Cash is king! It sounds like a slogan but there is no other time when these words are more true than now. Every crisis is an opportunity and there are many opportunities to come in this crisis. There will be assets in different areas to be had cheaply, be it property or businesses. To take advantage of these opportunities, you need cash.
The most successful have prepared for it by selling some of their non-essential, non-strategic assets and currently keep unusually large amounts of cash so they can invest with a discount at a later point in time.
3. Invest during max panic.
When everybody thinks in one direction, don’t be surprised when the situation develops in the opposite direction. When everybody runs for the hills, that’s when you should take a contrarian view and go against the crowd. You will always find opportunities there where somebody loses liquidity and has to sell.
Many astute entrepreneurs expect property and the stock market to go down in price even in the coming months and years. When the panic in the market caused by the fears about the second wave and potential second lockdown reaches its maximum, that’s when the opportunities will outweigh the risk.
That’s when you should look for potential acquisition targets in your industry or expand your activities to new markets using your cash stash.