2020 can be now declared as the year of COVID-19. As we enter into the ninth month of the year, we cannot firmly determine if the world is recuperating or worsening. Some countries are still trying to contain the virus with preventive measures like social distancing and face covering. At the same time, some countries are reopening businesses (with precautions) after witnessing a decrease in the number of cases. That said, there are regions that are experiencing the spread of COVID-19 again after fully recovering from it. With no clarity about the aftermath of the vaccines being developed around the world, everybody is adjusting to the new normal rather than putting life to an endless interval.
The world is going through the great recession of 2020 and the new normal is our only way out. In this blog, we are going to discuss how small and medium businesses can minimize the effect of COVID-19 and stay profitable under these extreme circumstances.
Focus On Your Cash Flows!
Currently, the most important thing for small and medium businesses to do is to preserve the cash flow. This might not be the best time to think about economic expansions rather it is essential to sustain through these challenging times. Therefore, the new normal requires SMBs to optimize cash flow velocity to make it through.
It’s okay to say NO!
Earlier, it was acceptable to invest time and resources to land huge projects. But right now, small and medium scale businesses should focus on projects with shorter sales cycles. So, you can simply say “not now” rather than “maybe” instead of investing your time and resources on an indecisive potential client.
Indecisive Prospects Can Be Your Biggest Disadvantage, Especially NOW!
Two of the most significant assets for SMBs are money and time. When a prospect requests an RFP (request for proposal), it indicates the beginning of a long and tedious process of several approvals and a clear sign of indecisiveness.
Most of the potential clients ask companies to build RFPs that help them refine their product attributes and feature listing. While it is completely standard under normal circumstances, you SMBs must understand that the current situation isn’t favorable for spending time and resources in building such documents that are primarily used to educate the prospects.
Avoid Low Margin Projects
Many companies or government entities prefer to acquire or build solutions on the basis of the lowest bids. Small and medium businesses need to realize that you cannot keep chasing the low margin projects in the current situation. Such projects are relatively large in size but yield low profitability. Consequently, the SMBs end up wasting their time over marginally profitable projects.
Stay Away From Unpredictable Clients
Besides indecisive clients, small and medium businesses should also not cater to the unpredictable clients. Prospects with irrational requirements and uncertainty about the project roadmap should be avoided, especially when you are trying to survive in the market. Although this kind of behavior is mostly seen in government clients because of the changing election cycles and associated favoritism of companies, some non-government customers can also be tricky at times. Therefore, to avoid losing your clients to other competitors, it is important to stick with clients who are clear and predictable.
Steer Clear Of Projects With Vendor Approval Processes
As I have mentioned again and again, SMBs do not have luxury to spend their resources and time as freely as they wish to. Every decision should be made considering minimal wastage of resources that results in maximum results ( better cash flows). Having said that, certain projects will require a series of approvals from vendors. Some might also need additional investments. This is something we are strictly avoiding at all terms until we go back to the real normal.
No, We Don’t Want Any Slow Payers. Not Now!
To accelerate the cash flows, slow payers are a big no no. Prospects that have 120 days or more payment terms should be off limits. SMBs will need to borrow money to cope with the adverse impact of COVID-19. Therefore, keep clients that can pay in time without any complications.
First Land, Then Expand
Incentives on the basis of sales are a good way to motivate the sales team to bring more business. However, the new normal demands measures that accelerate cash flow in a shorter time. Therefore, the sales team should focus on landing clients first and then maximize the revenue from acquired customers with well-defined post-sales nurturing strategies.
Drive More Business From Existing Customers
The existing customers are your best potential customers for more business revenue. Besides being direct customers of additional products or services, existing customers can generate new leads through referrals. Rather than assigning existing customers to customer service teams, let your sales team drive more revenue out of them and give them rewards directly.
Get As Much Upfront Payments As You Can
To survive in the market, small and medium businesses need to utilize the upfront payment strategy. Associating additional services or discounts can motivate prospects to make upfront payments. In subscription based models or SaaS products, businesses should adopt the pay in advance strategy rather than collecting money at the end of the month.
Invest In Profitable Partnership
Partnership with a large company can be a wise decision to save your business. SMBs can leverage the pre-established relationships of the partner to drive more business and find new prospects. Even though such partnerships can help overcome the critical situations, SMBs have to share a marginal portion with the partner.
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The outbreak of COVID-19 has disrupted the global economy. It has forced businesses to think of ways to keep their operations functional. In the adversity, new possibilities and opportunities have also opened up that are likely to remain even when the world fully recovers from the 2020 pandemic. That said, it is essential that businesses, especially small and medium scale, ensure to follow methods and techniques that work in the new normalcy rather than sticking to the conventional business methods.
We at Synergy, believe that businesses that are determined to transform the world would find a way to succeed even when the circumstances tell otherwise. Our experienced business consultants and expert analysts help small and medium businesses to foresee the market trends to be able to strategize efficiently.