As the COVID-19 pandemic takes hold there is wealth of helpful information focused on what a business can do to steer through the current unchartered waters, but what are some of the common mistakes that one should try to avoid during a recession?
- Taking no action. This can either be because of the paralysing uncertainty of what lies ahead or hoping your business will be immune. Don’t wait for the storm to pass; no one knows how long it will last anyway. Quickly seek to reflect honestly about where thing stand, plan accordingly and take decisive action.
- Not communicating. This is the time to show up with clear and authentic messaging to key stakeholders. A delayed or non-existent message may cause you to lose control of the narrative regarding whether you are open for business, whether suppliers or financiers should worry about your business’ ability to honour payments, and whether staff should be concerned around job security.
- Underestimate how long the crisis may last. Protect cash flow, just in case the situation is prolonged beyond expectations. Whilst focus should be on survival, if possible: have a growth game plan and try to keep some cash aside to stimulate once activity picks up again.
- Neglect existing customers, in pursuit of new opportunities. As your business seeks to diversify revenue pools, don’t forget to look after the goose that currently lays the golden egg (existing clients). Perhaps worthwhile for a business to even seek to gather insights from previously lost clients or reflect on lessons learnt from lost business opportunities. Currently, it’s also crucially important to understand the financial wellbeing of your typical clients and whether or not your product / service is still relevant, important and affordable.
- Borrowing to finance consumptive expenditure. The current lower interest rate environment has reduced the cost of borrowing; however, it is as important to say no, as it is to say yes to funding offers. Only borrow what your business will be able to repay down the line.
- Excessive cost cutting and too many controls. Understandably, businesses should endeavour to contain costs as they contend with lower growth expectations. However, one should be conscious of cutting so much that service levels are impacted and staff is burnt out, disempowered, unrewarded and demotivated – all of which can harm the innovation culture your business needs most right now.
- Failure to celebrate the small wins. Whilst a long-term vision is important, take the time to acknowledge the positive steps and milestones achieved along the journey. Remember that there will be mistakes made along the way; the hope is that you make new mistakes, instead of repeating the old ones.
“In this digital and information age there is plenty of great content (particularly online) that businesses can access and leverage to navigate today. Use it,” concludes Bata
By Andiswa Bata, FNB Business Regional Head for Gauteng South West