Throughout our Roadmap to Recovery series, we have addressed various tools and strategies that business owners can use to restructure and strengthen their businesses. As you move forward in the new business world brought on by the COVID-19 pandemic, we hope you can put some of these tools to use for your company’s success.
Now it is time to look to your company’s future. Give your business a strong position for growth as you move forward with your roadmap to recovery.
Responding to Economic Downturn
Studies have shown that some companies are able to flourish after a period of economic downturn, regardless of their pre-recession standing. The companies that thrived were able to strike a balance between cutting costs for their survival and investing in opportunities for their growth. These growth opportunities include spending on marketing campaigns, new assets, and research and development initiatives.
Periods of decline provide an excellent time to identify and strengthen areas of weakness in your business. These may include inefficient operations, unreliable suppliers, untapped market opportunities and more. Use this downtime to adapt your business but be sure to stay open to opportunities for growth.
The New Normal
As states start their reopening efforts, we can get some idea of what post-pandemic business will look like. This new business world will likely include a larger portion of the workforce participating in telecommuting from home, a decline in travel, increased video conferencing and more.
The shift to a work from home culture will also have lasting impact on cost of operation. There will be a decreased need for commercial space, an increased need for reliable video conferencing software and sizable changes to industry standards. The business world is changing, and your business will need to adapt to stay competitive.
This may also mean major changes to your operational structure. Businesses that had to scale back during the pandemic may opt to keep certain changes when they restore their operations. For example, do you have a department that’s nice to have but not necessary? Does the support of that department directly impact your customers? Will the department contribute to future growth? Ask yourself whether the department will ultimately strengthen your business as you move forward.
Opportunities for Growth
In many industries, there are opportunities to grow your business available to you right now.
Businesses can now consider creating new product lines or offering different services to take advantage of new market opportunities opened by the pandemic.
Mergers & Acquisitions
Mergers and acquisitions have the potential to increase a company’s revenue. Businesses have the opportunity acquire vital business property at a lower price point during the downturn.
The candidate pool is growing. Businesses can bring in top talent to strengthen and train their current workforce.
Consumers have new needs in the face of the pandemic. Businesses can adjust to meet these needs and open a new stream of revenue.
Before you take advantage of a new opportunity, though, be sure your business is in a strategic position. This includes evaluating involved risk, considering your cash position, and forecasting the effect of the decision.
Why Consider a Transaction?
- Add a product or service
- Strengthen existing weaknesses
- Add new customers and revenue streams
- Consolidate competition
- Acquire at a lower price point
Growth is expensive. Companies should consider whether the price of one of these corporate-level transactions will be advantageous for their business. Any and all transactions should be evaluated using industry-backed research and the proper forecasting.
Business owners can also determine if debt funding or equity financing is an option available to them in the current financial climate. Conduct risk assessments to determine if your business can handle the additional debt accrual.
As you consider whether a corporate-level transaction is advantageous, you should also consider the following:
- Strength of your banking relationship
- Possibility for non-traditional funding options
- Your complete set of a financials
- Overall ROI
- Associated risk
Post-pandemic downtime can be used to maximize due diligence efforts. Use the extra time to determine the best way you can strengthen and grow your business.
The COVID-19 pandemic has brought on an unprecedented period of uncertainty in the business world. Companies that not only prioritize their current survival but also their future growth find themselves in competitive positions later on. Use this time to expand your company’s potential and set your business on both the road to recovery and the path to success.