The pandemic came as a surprise, leading to massive disruptions in the market. The limited operations and the Great Resignation have crippled businesses. Even so, recovery began earlier and faster than expected.
The new normal offers more growth opportunities as the global economy rebounds. But, businesses must be more cautious as unpredictability remains. Here are some things that you must consider to ensure the success of your business today.
Guard Your Finances
Sure, the easing of restrictions makes growth prospects in 2022 more enticing. But, you must remember that pandemic uncertainties continue to lurk worldwide. Preparing a contingency plan for your business is a wise move.
One way is to study your finances before, during, and after the pandemic. For instance, you may refer to your operating revenues, costs, and expenses. These account for the direct amount you spend and generate from your operations.
Which among your products or services sells the most? `Where do you spend most? What can you do to limit your spending while maintaining your revenues? Can you increase your operating capacity while keeping your costs and expenses?
You can adjust the number of employees and the amount of materials. Doing so will help you determine if your business can suffice future expansion.
If you want to ensure the precision of your analysis, you may refer to other accounts. For example, you may check your Free Cash Flow (FCF) instead of your net income alone. Why? Because FCF only accounts for cash transactions. It does not include depreciation and amortization, impairment, and valuation.
These accounts are not an actual expense in nature but a deduction to the value of your assets. Also, FCF includes the operating assets and liabilities and Capital Expenditures.
But amidst the uncertainty, it is best to repay all your borrowings if you can. Interest rates are still low but may increase once the economy recovers. Although the change will be gradual, it will make your borrowings more expensive.
Adapt to Digital Transformation
Before the pandemic, digital transformation has started to change the market landscape. Today, technology plays a key role in helping businesses stay afloat.
As more and more sellers and buyers go online, marketing and payments are changing. From the business perspective, technology can be utilized to improve operating capacity.
Digital marketing is now a common trend. But, there are other business aspects you have to consider.
For instance, you can improve operational efficiency using monitoring software for employees. It can be annoying for them, but it helps ensure their productivity. It is more crucial since you cannot always check with them in a remote work setup. For manufacturing, you can use software to manage your inventories.
You can also utilize technology to optimize business processes. There are tools you can use for planning and scheduling. This way, you can save more time, energy, and money.
There are plenty of options to keep track of all your business transactions. You no longer have to worry about coming to your office and sorting tons of invoices. Online payments are now available, which automatically generates invoices. In a 2020 study, 74% of businesses in Southeast Asia were open to virtual credit cards and e-wallets.
Over the past decade, cash transactions across different countries have decreased. The fintech industry has flourished, translating into more VCCs and mobile wallets.
Even when you go to physical stores, these payment methods are now widely accepted. Cashless transactions are now a popular trend. Even in emerging countries like Malaysia and Indonesia,
While you are at it, you may also consider accepting cryptocurrency payments. In Singapore, some government agencies have started to accept Ethereum contract payments. Yet, it entails more care to avert potential frauds.
Taken from McKinsey & Company and Cash Matters
Beware of Fraudulent Activities
Fraudulent transactions have become more common since the pandemic started. More businesses and customers started to make transactions online. In turn, fraudsters had more opportunities to find unsuspecting targets.
Your business plan and finances are still at risk, no matter how secure your data is. Any malicious activity must not get through your business information. For example, you may consider purchasing cyber insurance.
Cyber insurance is not so common that many businesses fail to see its importance. In case of theft, reputational damage, and business interruption, you are safe. It also provides financial protection for data restoration and forensic investigation.
Using virtual credit cards for your business transactions is a plus. You can use it for transactions with your suppliers and creditors. You will only need a VCC number separate from your actual card number. This way, the only information you will give is the VCC number, so your card is safe.
Take Care of Your Staff
Amidst the Great Resignation, the last thing you want to see is your employees jumping ship. Hiring and training new ones are costlier and more time-consuming. That is why you have to make your employees feel that they matter.
One way is to create a more vibrant work environment. But note that the pandemic fear has not subsided yet. If a hybrid or 100% remote work setup still works, why do you have to stop it now? Leave things as they are if nothing has to be fixed.
In a recent survey in specific countries, 28% of employees would quit if not allowed to work from home. The highest was in India at 49% while France had 18%.
Taken from Fortune
The same scenario goes with Southeast Asia. The majority of respondents in an EY survey are fine with working anywhere. Many employees still prefer flexibility and safety over productivity.
Taken from EY
In a separate study by Bloomberg, employees focus on the perks of flexibility in their work setup. Transportation, savings, and transmission are their primary concerns. Among the surveyed individuals, 84% the no-commute work setup is a plus factor. Meanwhile, 75% found that a flexible work setup helped them save more.
Taken from Bloomberg
You may also provide them with perks for staying at work amidst the pandemic. Office work setups require more costs, from renting office spaces to utility bills. Why not spend a little to show them you care?
But if you have to go back to the office, make them feel safe. You may provide company shuttles if possible. You may also encourage vaccination without discrimination.
Observe Economic Changes
The last part of ensuring the success of your business is observing economic changes. Now that most countries are opening their borders, the global economy may rebound. But what you should watch out for are potential macroeconomic changes in 2022.
Amidst the Great Resignation, businesses started to recover during the second half of 2021. The unemployment rate became manageable, although it stays above the pre-pandemic level. Given this, more people are getting hired again and have higher purchasing power. This will drive more demand for goods and services.
Also, hard-hit industries, such as hotels and resorts, may see pent-up demand. In the US alone, hotel rates are 1000% higher than in April 2020. In the Asia Pacific, hotel rates on average are $2 higher than in 2019. This is only an example of the current situation. Once the economy fully recovers, prices may keep increasing.
G20 countries saw an increase in their average inflation rate in only a month. From 6.44, it went up to 7.25 in only a month. Note that the global increase may be gradual, but policymakers must be careful.
What does the inflation rate have to do with your business? Probably, none. But if you have borrowings, be sure to pay it on time. A continued increase in the inflation rate may lead to higher interest rates. This will have an impact on your liquidity and sustainability.
Taken from Trading Economics
The Bottom Line
Putting up and running a business appears to be enticing today. The new normal offers more growth opportunities. But, you have to be more careful as economic uncertainty remains. That is why you have to step ahead of time to keep with the challenging market environment.