In truth, it can be hard to quantify the full economic impact of the coronavirus pandemic across the globe. According to some estimates, however, the pandemic and the various measures used to minimise infection rates could cost a cumulative $10 trillion in forgone GDP over 2020/21, despite the impact of returning growth on a global scale. Regardless, there’s no doubt that many businesses and industries have faced a financial crisis over the course of the last 18 months or so, with some thriving while others have fallen by the wayside. But how can your firm overcome a financial crisis?
- Start by Identifying the Underlying Cause
Not all financial or economic crises are created equal, so it’s crucial that you kickstart the recovery process by identifying the underlying cause of the crash. The main reason for this is simple; as any financial crisis can be triggered by internal or external factors, from those that impact solely on your business to others that are associated with a wider economic contraction. Most recently, of course, businesses have faced various financial crises as a result of Covid-19, which created a pressing need to initiate proactive and short-term measures that are focused on consolidation and can lay the foundations for growth once economic normality returns. Even on a fundamental level, financial issues are usually indicative of a bigger, wider and more complex issue, and this will need careful attention and understanding if you’re to lead a successful corporate recovery.
- Focus on Core Competencies
During times of tumult, small and medium-sized firms often focus on diversification as a way of increasing revenue, but this can be problematic if they oversimplify the concept and simply add new products to their offering. This is particularly true if firms add random and irrelevant products to their core ranges, or simply start to develop and launch offerings for which no gap exists in the marketplace. This is often a huge waste of time and money, at a time when you simply cannot afford to waste your firm’s core resources. It’s an approach that can even dilute and damage your business’s central model and brand identity, so it’s far better and sustainable to focus on your core competencies and streamline the investment that’s injected into the firm.
- Set New and Relevant Priorities
Many businesses see financial crises as an opportunity to restructure their core models, in order to become more efficient, reduce costs and potentially solve long-term financial issues. Of course, this will require expert legal knowledge and a keen understanding of your target market, but it’s a strategy that can create a more profitable and resilient business model in the wake of both internal and external challenges). You may also want to reorder your priorities and change the way in which you budget, with the latter requiring you to tighten your company’s spending according to your unique circumstances or the wider economic climate. More specifically, you should look to allocate your budget to the things that help to optimise business profitability, while accounting for the practical challenges that your company continues to face.