This article was first published on 23 March 2020 and has been updated with additional reporting.
COVID-19 has caused close to a million reported deaths worldwide since it first emerged in China last December. Companies are feeling the impact of the coronavirus, as employees are confined to working from home, customers have to stay home and large-scale social gatherings are postponed.
As the global pandemic rages on, companies have to act decisively and persevere through the tough times. How can businesses cope in a crisis like this?
#1 Building Up Strong Emergency Savings
Businesses with limited cash reserves or unstable cash flows are particularly vulnerable in a pandemic like this. In fact, liquidity crunch is one of the main concerns SMEs shared during a Singapore Chinese Chamber of Commerce and Industry (SCCCI) roundtable earlier in the year.
With the slowing economy, you should review and adjust your cash flow forecasts – how will the reduction in revenue impact your ability to pay your employees and suppliers and repay debt?
In the short term, you’d want to strategically manage working capital and defer non-essential spending. Under normal business conditions, companies might choose to focus on profits and losses. But in times like this, you may want to consider shifting priorities to cash management and liquidity.
Explore your financing options to ensure that lines of credit remain available should you require them. To help SMEs address urgent cashflow constraints, banks are introducing liquidity relief measures such as the Temporary Bridging Loan, providing up to $5 million, with an interest rate capped at 5% per annum. SMEs also have the option of deferring their principal repayment for up to one year to help their cashflow management.
For companies that require further support, the Enhanced Enterprise Financing Scheme – SME Working Capital Loan can provide a collateral-free business loan of up to $1 million.
If anything, the worldwide pandemic has shown that it’s still crucial for businesses to have an emergency fund. Whether these funds help to keep your business running during slow periods or to tide through a black swan event like the COVID-19 outbreak, it provides the financial stability to pull through obstacles.
#2 Stay Relevant In Changing Times
COVID-19 has accelerated the rate of change in the world today. One of the greatest challenge that businesses face is to evolve their business to stay relevant in the long-term while fighting to deliver operationally in the short-term. For many businesses, it may take a crisis like this to hit before they embark on real change.
For instance, security services company Ademco Security Group ‘went to cloud very, very early’. At a post-Budget roundtable, the group’s managing director, Toby Koh, shared that it sped up their processes and enabled service delivery a lot faster.
“In a case like the Covid-19 right now, every single one of my team can work from home,” said Koh.
For businesses hit by the slowing economy and disruption to business, it provides an opportunity to reskill your workforce. With change as the only constant, learning should not be a one-and-done process, but a continuous cycle for everyone. Employees can tap on their SkillsFuture credit to pick up new skills and stay employable. And with the advances in learning technology today, picking up new skills with online courses is affordable and accessible on platforms like Coursera or Udemy.
The government is also contributing to the solutions with various skills upgrading initiatives, including Workforce Singapore’s Professional Conversion Programme (PCP) to help companies with funding and certification support when they send new and existing employees to acquire in-demand skills.
Companies can also leverage on technology to streamline their work processes and seize new opportunities. The government’s SMEs Go Digital programme provides up to 70% grant to encourage SMEs to adopt market-proven digital solutions. These solutions – consisting Accounting, Human Resource Management System (HRMS) & Payroll, Digital Marketing, Digital Transactions and Cybersecurity – are consolidated in Start Digital Packs offered by banks and telcos partners.
For example, OCBC has put together 3 bundles in its Start Digital Pack with various digital solutions which can be enjoyed for free for at least 6 months.
#3 Be Agile In The Way We Work
The global pandemic is changing the way we live and work. Companies are forced to implement flexible work schedules, be it employees working from home or on staggered arrangements. Companies must be flexible to cope with such changes.
For instance, retail stores are cutting store hours or cutting down manpower to reduce labour costs, as well as moving into e-commerce to cushion the blow. How can your business adapt quickly to the slowing demand caused by the pandemic?
If your retail store is experiencing slowing sales, this could be a good time to begin the renovation work you’ve been holding back. It may also be time to pivot online to bolster your sales.
Downturns can present opportunities too, but to realise them, companies must be willing to adapt their strategy. With businesses taking a hit from the virus outbreak, clients, suppliers and customers alike are less active in operations. This can be timely to address ‘important, not urgent’ goals that may have been neglected in favour of day-to-day operations, e.g. exploring alternate revenue sources, building team culture, or trying out a remote working arrangement.
(Additional reporting by Dinesh Dayani)
Open A New Business Banking AccountLooking for a bank account for all your business transactions? The OCBC Business Banking provides a wide range of business accounts for you to choose from so that you can find the most suitable account for your business needs.
Join The DollarsAndSense Business Community
For more content that helps entrepreneurs, freelancers, and self-employed individuals and learn to build better businesses, join the DollarsAndSense Business Community on Facebook.