Due to the COVID-19 pandemic, many business leaders and entrepreneurs have had to reassess their business strategies because the potential for survival and sustainability has become a significant concern.
Research has also shown that more than 70% of startups end contracts with full-time employees.Regardless of the industry, creativity has increased, and individuals and companies have created new ideas to respond to existing and emerging needs that governments and centralized institutions may have insufficiently addressed.
The picture of how entrepreneurs and their systems have been impacted is more subtle than we might believe at first, but understanding it is critical: how it is reshaped today will have long-term consequences. What would have made sense and is easier said than done is that the naturally vulnerable SME and entrepreneur sector within the business world would have been better prepared for the pandemic if they had built their resilience beforehand. However, since none of us were truly ready for the considerable impact the pandemic would have on our lives, it was challenging to build up resilience. But, it is never too late to plant the seeds for short, medium, and long-term resilience because it is possible for anything to happen, whether it comes in the form of a pandemic, extreme weather, or anything in between.
Entrepreneurs must be resilient in two ways: one, they must bounce back from market collapses, supply chain breakdowns, and workforce capacity depletion; and second, they must engage in two seemingly contradictory activities. The other is figuring out how to break into markets, supply chains, and talent markets where the rules for survival and success are hazy and constantly changing.
To bounce back and progress, SMEs and entrepreneurs need to respond effectively through five key pillars that combine to form resilience: leadership, revenue, organizational, financial, and operational.
When it comes to leadership resilience, contrary to popular belief, it is a team effort that requires entrepreneurs to strengthen an entire network of relationships that includes everyone from their customers, their stakeholders, and suppliers to their community. To do so successfully, they must first plan out the different connections. Then, in order of importance, entrepreneurs should rank their dependencies, paying particular attention to those most critical to their survival and growth. Third, they need to identify the relationships that require the most strengthening, the least resilient ones. This should not be viewed as a test of the stakeholders’ vulnerabilities but rather the vulnerabilities in the relationships they have with them. Ultimately, entrepreneurs should take proactive steps to strengthen critical relationships by creating communications plans and protocols and identifying information that is critical to their stakeholders.
Interestingly, because many people take these things for granted, it is also equally important to identify and take care of personal vulnerabilities like eating well, exercising, prioritizing sleep, and managing finances. While these activities and stockpiling knowledge may seem irrelevant compared to the number of responsibilities that entrepreneurship entails, they can be instrumental when things shift for the better. Gaining knowledge can mean learning a new language, developing skills to use remote platforms, studying recent trends, etc.
The next type of resilience is revenue. Changes that cut off revenue streams can put a company’s existence in jeopardy. Thousands of businesses have accelerated sales programs due to the pandemic, but customers often perceive such efforts as desperate or, worse, deceptive. Customer engagement and connection are suffocated as a consequence of this. This scenario can be avoided by preparing for market shifts ahead of time by establishing and nurturing resilient customer relationships. Businesses should have regular conversations with their customers to discuss “what if?” scenarios related to their product.
Organizational resilience is also essential to surviving in any industry. Businesses with solid organizational structures will not only be able to survive shifts, but they will also be able to strengthen their culture and uncover new depths. For example, many entrepreneurs and business owners are discovering their employees’ loyalty and dedication and new emergent leaders and employees with critical but previously untapped skills as a result of the current pandemic. Unfortunately, others are seeing the opposite. Because organizational resilience isn’t a one-size-fits-all solution, it’s critical to establish clear written guidelines for those who make decisions. They should then systematize the unrestricted flow of information from employees. Thanks to the available information, employees can confidently raise red flags about potential problems, such as sudden changes with customers or changes in government regulations. Many business owners were caught off guard by the current crisis without a clear plan in place to cut personnel costs, whether through layoffs, furloughs, or salary reductions. So, it is crucial to create a written plan for cost-cutting in a shift while the need is still fresh. Companies need to decide how they would balance wage reductions with headcount reductions, enlisting the help of their top team. They must deliver terrible news clear, concise, and compassionate manner. Daily updates should be made with realism, transparency, and honesty. Announce layoffs or staff changes to the entire company, along with the personal sacrifices made by the company’s owners and other leaders. Another way to establish transparency is to create a discussion forum and make it clear that making mistakes will not result in retaliation. At this point, they should act as a role model by admitting their shortcomings.
The next type of resilience is financial. A surprising number of business owners and entrepreneurs entrust their financial details to their accountants or financial advisors. This is a giant mistake. Knowing how money moves through a company is an essential part of preparing to be financially resilient. The vital tool for this is a cash flow forecast, which should be at least 90 days long on a daily resolution and 10-15 weeks long on a weekly solution. Businesses should also cover other future supply contracts, such as negotiating cancellation or service suspension clauses. When the company is good, they should also negotiate credit facilities with bankers and credit lines with suppliers. Suppliers will be much more willing to provide flexible terms now if they have been consistently paid on time. When shifts occur, businesses should implement new payment terms to facilitate cash collection and offer early payment discounts. Some customers will be dealing with cash flow issues, while others will have the funds and will appreciate the discount. If necessary, now is the time to ask suppliers, landlords, and advisors for longer payment terms or discounts.
Finally, operational resilience is essential. The fragility of supply chains has been one of the biggest surprises of the current pandemic. As a result, it’s critical for businesses to map out their supply chain from raw materials to the end customer, identifying potential vulnerabilities. Identify primary and secondary suppliers for all essential inputs to reduce the risk of overlapping exposures. Companies should conduct a formal audit of their manufacturing and service logistics and create a written protocol for communicating with suppliers during a crisis, which should include something seemingly simple: updated contact information.
Because information infrastructure can create vulnerabilities, they should implement a data security plan like regularly changing passwords.
Trying to juggle all types of resilience, much like entrepreneurship as a whole, cannot be achieved without discipline and rigor. However, the good news is that none actually require specific expertise or expense, but just the conviction to do so.
In the hopes of providing entrepreneurs and SMEs with all the step-by-step advice on starting their online business journey through to growing it and eventually selling it in the end, Emily and Blair have created a platform that provides people with a free library dedicated to helping them navigate the online business world clearly and enjoyably that also provides focus on them, the business owner, in keeping fit and healthy along the way.
The library is broken down into Journey Steps, which are the stages people will go through when starting their own business. People may quickly traverse through the articles using the right-hand bullets or the navigation in the article’s sidebar. They decide where they are in the process or what information they require before diving into the content. If they’re beginning from scratch, they can start with Step 1 and work their way through.
To begin the process towards entrepreneurship and understanding the different steps and types of resilience, click here for more information.
