Dr. Nirmal De Silva
It is evident that the Covid-19 pandemic would create a significant economic impact globally. Whilst it is rather premature to predict the overall impact, one can safely conclude that the impact will last for a number of months (best case scenario) post Covid-19. In Sri Lanka too we can expect our economy be impacted severely. The tourism industry which currently employees around 600,000 people both directly & indirectly will be an industry which will be affected not only at present but post Corvid-19 as well since tourists will probably not travel out of their home countries for a while at least. Similarly the Tea & Apparel industries in Sri Lanka will also suffer due to this pandemic as a result of reduction in consumer demand, supply chain issues & stringent cost reduction strategies by both customers & partners. However, no industry will be spared from this pandemic. Out of the approximately 8 million total employed population of the country around 1.5 million are daily wage earners & around 2.3 million are self-employed. Hence, people such as labourers, carpenters, lottery ticket sellers, street vendors, salon workers, ‘buth’ packet vendors to name a few will definitely struggle in the short to medium term as result of this pandemic situation. Unfortunately this segment of the country is often ignored when it comes to various government incentives & stimulus packages. One can argue that this time around it is not going to be 'survival of the fittest' but rather 'survival of the most adaptable'.
Around 70% of the Sri Lankan economy is contributed by Small & Medium Enterprises (SME's). Whenever there is a crisis it is the SME sector that is hit the most. Considering that we are just 12 months after the horrific Easter Sunday terror attacks, the Corvid-19 pandemic is definitely a deadly & unwelcome blow for SME's. The purpose of this article is to provide SME's in the country some practical aspects on how to re-look at their purpose, re-strategize & re-calibrate their businesses if they are to survive & ‘wither the storm’ during these tough times. For the purpose of this article, the focus would be only on the SME sector of the country. Exemplified below are 5 areas that Sri Lankan SME's (even tough applicable for larger organizations as well) should focus on in order to face the economic challenges during & post Corvid-19.
1. Engage your employees - SME owners & decision makers need to ensure that everyone in the organization stays calm & maintain focus. There is an information & news overload (including fake news) these days which can easily increase the level of fear, anxiety & bring about a sense of over-hyped uncertainty. Hence, there should be clear, consistent & open communication within the organization. The safety of everyone within the organization should be paramount & non-negotiable. Helping them overcome temporary issues such as sourcing essential groceries for example can help them psychologically be prepared to work. Assuring job security (if possible) will also send a very strong positive message to the employees. Due to the current lockdown the only option is to work from home. Ensure you equip everyone in the organization with the necessary tools required to work from home effectively. Whilst larger organizations have their own platforms & tools, SME's can use a number of free tools available like Slack, ZOOM, Google Docs, Skype & Google Meet for example to communicate & collaborate within the organization so that work & productivity is not impacted.
Similarly it is important to engage everyone in the organization to share new ideas, possible strategies & provide feedback on how to navigate the business during these times. Some of the best ideas in any organization come from internal resources & SME owners & decision makers need to encourage this more than ever before. Employees will naturally be more committed when they know that their ideas are appreciated & implemented. Creating an environment which supports each other & ensures team work is absolutely essential in any crisis. Encouraging innovation & creativity will also help organizations derive new ways to grow their businesses & serve its customers better. Whilst these sound rather straightforward it is surprising to see how such basic aspects often get ignored during times of pressure & crisis.
2. Re-evaluate the Business Model - It is important that every organization re-evaluates its business model based on the current & potential post Covid-19 future. There is a need to understand & look closely at the revenue sources, cost structure, value proposition, key partnerships & activities of the organization, customer segments & channels based on the new developments. There is a strong possibility that the world we will all embrace post Covid-19 will be a new & much different one. Change is inevitable & adaptability to these changes in a proactive manner will be the key for every SME. It is important to focus on value creation as this would be the differentiator between success & failure. Existing products or services may not have the same demand. Hence re-evaluating the business model & making the necessary changes to it has to be done on ASAP basis.
3. Financial Management of the Organization - One of the biggest challenges during any crisis will be on how to effectively manage the finances of the organization. Cash flow management will be the most critical aspect during these times. Identify possible ways to reduce costs throughout the organization by closely examining every aspect of the business process. Leveraging the existing relationships with suppliers, partners & vendors should also be a priority. Negotiating additional (extended) credit terms or collecting payments in advance (than usual if possible) will no doubt help the financial position. Avoid being tempted to revise prices without any rationale or basis since this will only hurt the business further in the long run. SME's also need to do new budgets & forecasts based on worst case assumptions. This can be done using scenario planning techniques. The adaptation of best practices in the industry & especially the one's implemented by large organizations will also be a helpful initiative for SME's to replicate during these times. SME’s should not fear to ask support or guidance from a variety of sources. There is no room for ignorance or ego. Every type of genuine support should be welcomed with arms wide open.
4. Support your Customers & Stay Close to them - It is important that SME's engage & stay closer to their customers during these tough times. It is clear that your customers are also severely impacted by Corvid-19. Now is the time to be flexible (revise any internal procedures if required) & come up with new solutions, ideas & ‘out of the box’ thinking to support your customers. Engaging customers, listening to them & getting their feedback should be the mantra more than ever before. Losing customers is more detrimental than losing revenue at the moment. SME organizations need to focus on Customer Relationship Management (CRM) during these times. If the company does not have a formal strategy in place for CRM at the moment they should work on one immediately. The good news is that there are a number of online resources available that are useful in this regard.
5. Leadership & Renewed Purpose- Various experts have argued that effective leadership is an essential aspect when navigating during tough times. SME owners & leaders need to have self-belief & inspire others. They need to exemplify resilience & 'walk the talk'. During these times the image, ethics & decision making capabilities of leaders & organizations are tested to the core. Any myopic decision or unethical act will be remembered for a long time with often irreversible outcomes. The reputational damage due to such narrow thinking can be lifetime. There is also a need to re-examine the purpose of an organization & what it believes in. Creating positive impact is more important than profits. Tough times indeed call for tough decisions. The best leaders are able to mobilize everyone towards a common vision & exceed their individual potential. Hence, leadership will play an important role on how a SME will survive & mitigate the economic impact resulting from Corvid-19.
It should be noted that there may be a number of other strategies or aspects that SME's can use to mitigate the challenges associated with the Corvid-19 pandemic. However, the author of this article is of the view that the 5 broad areas exemplified above will definitely be useful for SME's if implemented with diligence & careful analysis of its strengths, weaknesses & strategic priorities.
The Corvid-19 pandemic does not differentiate based on race, religion, age, nationality, gender, political affiliation or lifestyle. The entire world is united in the fight against the pandemic. From a Sri Lankan perspective as well, we need to be united to mitigate the impact of this scenario. There is no room to be myopic, selfish or narrow minded. We all have a responsibility to help the authorities fight this deadly pandemic as one nation & to flatten the curve.