The landscape of brick and mortar businesses has been forever changed since the COVID-19 pandemic hit. As of March 2020, 93% of restaurants have experienced a dip in revenue. 80% of them are downsizing to cut costs. The retail industry saw its biggest drop in sales in the past 22 years. What can businesses that have a physical presence do to adapt and navigate the tumultuous recovery process post-COVID ? We have some tips to entrepreneurs out there do just that.
1. Develop Winning Cash Flow Strategies
There’s a mounting pressure on businesses in terms of low cash inflows and high cash outflows in these times of uncertainty. One of the key things to do for business continuity is to have winning cash flow strategies.
- Utilize data to your advantage by keeping an eye on liquidity and projecting cash flow so you’ll have a somewhat clear idea of how much cash your business will have over a specific period of time.
- Extend payables window to improve cash outflows. When ordering supplies for your business, don’t hesitate to negotiate payment terms, especially with long-time suppliers. A bigger window to repay them might be worth more than say, a discount for repaying them sooner, depending on the situation.
- Improve receivables to boost cash inflows. Issue invoices for payments promptly and dole out discounts for early repayments. The longer receivables go uncollected, the more likely they won’t be collected either in part or fully. Consider offering payment plans to past-due clients that are having their own cash flow problems.
2. Re-evaluate Target Audience & Business Model
The customer base and their behavior has changed due to the pandemic and the first step to adapting is identifying these behaviors. There are less customers dining in restaurants and shopping in retail shops for a variety of reasons. Whatever few shoppers there are left are doing more targeted and less window shopping. Locals aside, tourists are virtually non-existent.
Possible workarounds include:
- Changing up your product mix, maybe widening or narrowing the range and pricing to appeal to a more local, everyday audience
- Negotiate for and set up pop up stores since they have lower overheads (subject to mall and location)
3. Re-evaluate Manpower Planning
Businesses should be increasingly looking to occupy the online space with the help of specialized expertise, whether it’s through training existing staff or hiring new ones. Hiring more people when so many places are downsizing seems counterintuitive, but it really isn’t. Talents that specialize in social media marketing, inventory and logistics planning and visual merchandising are invaluable right now. The Singaporean government has initiatives in place to assist entrepreneurs in hire, train or retrain staff like SGUnited Skills, SGUnited Mid-Career, WSG Professional Conversion Programme and so on.
4. Drive Online Sales
Many look at the change in meta due to COVID-19 a catastrophe and while that is true to a certain extent, this is also a golden opportunity for businesses to go digital to make use of various platforms like Lazada, Carousell and Qoo10 have been gaining traction in the past decade. F&B enterprises may consider island-wide delivery (the volume of delivery has been up 50%-300% compared to pre-COVID levels) to make up for the drop in in-person diners. One thing you can do is have online-to-offline promos to drive traffic, for example if customers order products worth at least X amount, they’ll have a 30% discount the next time they visit your physical store.
5. Implement Loyalty Programs
Most SMEs might not bother having loyalty programs because of the perceived hassle, including compliance with the Personal Data Protection Act 2012 (PDPA). However, according to a survey by Experian, 3 out of 4 companies say that they benefited from having loyalty programs and generated return on their investment in that regard. Enticing rewards offered in loyalty programs can improve customer retention and that costs 7 times less than having to get new customers.
6. Drive Upselling
Before the advent of touch-screen ordering at McDonald’s, chances are the nice lady (or man) behind the counter asked you, “Would you like a set meal?” as you were ordering your food. You probably said yes. I know I did. And that’s upselling, a sales technique used to sell additional goods and services at various touch points to existing customers. Upselling isn’t just simply pushing people to buy more, it’s understanding their needs and seeing if the purchase will further their overall goals. Sleazy tactics won’t work in the long term.
The above are just a few tips to aid companies in traversing the post-COVID environment. Work with your advisors and stakeholders to assess risks and impact of various options, and identify the path that best works for you.
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