How do SMEs survive during Covid19?
The corona came and changed all the contours of our lives, but the most affected by the pandemic is the economy.
The near-immediate economic recession caused by the pandemic has caused chaos in large and small companies.
But the most affected by this pandemic are small and medium-sized enterprises and some industries such as restaurants, retail and conferences are the hardest hit.
The crisis threatens more than 2.5 million SMEs in Egypt, which are the backbone of egypt's economy.
According to a study by the National Planning Institute entitled "SMEs in the face of the Corona pandemic".
The study indicates that Corona's implications for SMEs begin with weak supplies, reduced production and sales volumes, confusion, financial stumbles and loss of workforce, and may extend to bankruptcy and complete closure.
But despite this tragic crisis, some companies have been able to make the crisis in their favour and increase their sales.
According to Love money,Dolingo, an app that lets you learn a foreign language as quickly as you can, saw a 148% increase in subscriptions in the United States in March.
Actor Chris Hemsworth's Centre fitness app saw a 300% increase in downloads in April.
Zipnosis reported a staggering 3,600% increase in its use as a result of the CORONA virus.
According to CNN Business, etsy's online marketplace has sold $12 million or $133 million in cloth face masks from 60,000 sellers since the beginning of April.
Eco-counter said that in the first weeks of May, the southwestern United States saw a 100% increase in bicycle use.
So how did that happen, and what axes have these companies taken to help them in this crisis? Jason Nadal's proposal to get out of the crisison April 23, 2020 hosted a "flash" electronic seminar entitled "Overcoming the Covid-19 Crisis: Does Stagnation Lead to Innovation?" in the presence of Jason Nadal, founder of Centrado Advertising, where he reviewed lessons learned from previous recessions and how to turn around companies in times of crisis.
During the seminar, Jason gave several tips to overcome this crisis, including:
- The evolving business climate, which provides opportunities and opens the door to growth, must be adapted quickly, but companies that make radical adjustments to their business model to get out of the crisis must not be derailed and remain value-preserved.
- Turning the course intelligently, turning the path requires creativity, planning and understanding of what is currently guiding your customer base."
"When big companies try to divert them, they are considering ways to reduce unnecessary costs to maintain liquidity throughout the crisis.
Start-ups should look to divert from wasted money, how to adapt to people's needs, and non-core parts of their platform."
How many times have I heard someone say, "I can't wait for things to get back to normal?" While this is normal, the best idea to focus on is how to create a new normal in which to thrive.
How can this happen?!
If you are a company owner, you know very well that you should not take any step in your business unless you have studied it well and knew what good or evil it will entail, let alone change your business model, which is the main basis of your business.
So before we talk about the axes you can take to get out of this crisis, there are some necessary conditions that you have to meet in the axes that you will depend on to do your work:
Hubs should be a side extension of the company's current capabilities, enhancing its strategic intentions, offering a sustainable profit path, maintaining and enhancing brand value in the consumer's mind. The company's axes are aligned with one or more long-term trends.
After studying several cases of companies that managed to survive this crisis, the experts came out with several axes:
Creating a new purpose for existing key resources
- French multinational LVMH transformed its perfume factories into hand sanitizers in early March, providing French schools and authorities with a free disinfectant. This focus highlights their ability to find a new purpose for their current major resources.Although the move was not profit-oriented in the short term, it created value for the company in France and Europe, and this humanitarian activity enabled the company to keep factories open, as well as attract workers to work, ensuring continued production and reducing the risk of shortages. As in the case of LVMH, you can use key resources for a large number of activities. Have you thought about other activities that might better serve your customers or complement your current activities better? By forcing yourself to create different uses for these key resources you may find your next project.
2. Transformation into a light-asset structure
Technology giant IBM has used the need for home-based work policies as a result of the epidemic, to begin a massive shift towards a culture of permanent work from home.
While a large number of companies have seen the results of working from home in terms of both profits and productivity, few were willing to unify the trend.
IBM has smartly used the epidemic and transformed 75,000 global employees into permanent home-based employees, more than 20% of the company's global workforce.
According to Forbes magazine, the shift has led to a massive savings of $50 million for the company.
The company was able to significantly reduce property and office costs by seeing the need to work from home as an opportunity rather than as a threat.
Just like IBM, you have to think about how to find ways to transform into a light asset structure through outsourcing. Or completely get rid of the cost of your ledger.
3- Find a way to make it work
The conference sector was the sector most affected by the epidemic. But one of the companies that has survived in this sector is Banzai International Inc. The vast majority of them were personal events.
Prior to the epidemic, the company hosted conferences in the normal and customary way on the ground, and 13% of the company's events were online. When the crisis came and the company was close due to a lack of revenue, it tried to expand the online virtual events segment, but did not have the infrastructure and expertise to significantly expand this part of their business.
Instead of being subject to the status quo, the company acquired a small Houston company called High Attendance, a virtual events company, to do it for them.
The business model and management structure of the new company have been maintained as they are and have only been renamed Banzai Virtual.
After this merger, the scale of their events has since exceeded pre-epidemic figures.
"Our events have almost doubled in size," said Joe Davy, founder and CEO of the company, in an interview with the Los Angeles Times. We were fortunate to be able to respond very quickly, because this could be a big disaster for us. If we don't do anything and we decide to wait until it's over, we're dead."
Finding a new revenue stream
One of the companies that has struggled to find a hub to withstand the epidemic and overcome its core problems is Spotify, the world leader in music streaming.
Before the epidemic, Spotify's business model relied almost entirely on free users who should listen to ads. Although the model was already showing some signs of maturity, its limits were not easily clear until the epidemic spread and advertisers cut their budgets. This model has become a problem that must be resolved.
To overcome this problem, the company followed Netflix's equations of success and provided original content in the form of a podcast. The platform saw artists and users download more than 150,000 podcasts in just one month, signed exclusive podcast deals with celebrities and began organizing playlists.
5- Adapt to the situation
If you're a clothing maker, consider switching to mask-making around the world (for hospitals, schools, regular use… Etc.), if you work in the fitness world, consider using online courses and classes, and create an online environment that can lead to success.
Moving your business online may seem like a big challenge, but it's gone from being a new idea to something you need to do.
Not only did basic industries move online to stay afloat, but it included many handiwork that found that people were starting to use resources online, to improve many areas of their lives that they had no time to focus on before.
Switching to a digital business model is often not new, it's more acceleration than anyone expected. Fortunately, today's technological development has made it easier for your business to transform. Today there are a large number of applications, websites and online payment processors, which make the overall impact on your business a little easier to deal with.
The epidemic has shown us that the companies that are developing are really flexible companies. In the end, the purpose of using survival axes should not be to withstand more in the epidemic in the hope of returning to normal, but to take advantage of the opportunities they have created to build a more flexible model.
But the real question you have to ask yourself is: How willing is your business to make a quick adjustment in order to stay connected to today's world?