Business hurt by Covid-19? You can turn things around

The Covid-19 pandemic compounded by a weak economy left many businesses struggling.  According to James Njenga, a business coach based in Nairobi, the majority of businesses that collapsed were on their death bed prior to the pandemic. “The cost of living had become unbearable in Kenya prior to Covid-19. Many businesses were already struggling to find a turnaround strategy. The pandemic only accelerated the death of businesses,” he says.

As the lethal sting of Covid-19 cools off, entrepreneurs are wondering how they can turn their businesses around. Here are some tips from experts

Assess the damage

This includes both the financial and manpower damage your business incurred. Njenga says that you should audit for business loss, cash flow, capital position, as well human resources. “For example, you may have fired all employees, or fired some and sent others on unpaid leave. There might also be pending dues the business is yet to honour,” he says. Don't be quick to rush for a recovery loan before you can re-evaluate your business plan. 

Re-evaluate your business plan

Put a microscope on your business plan. “You might find that you didn’t follow your plan accordingly, or that your plan and strategies were out of touch with the reality on the ground,” says Jeff Haden, the author of The Motivation Myth. The reality on the ground could mean revenue streams, operations, expenses, and cash flows. “A great business plan does not always mean that you fully understand what your business is about or know the reason for its existence,” says Mr. Haden.

Revenue versus customers

A pandemic such as Covid-19 is not the only reason why a business can fail. Chris Proulx, the founder of online certification start-up eCornell says that his revenue streams dried three years after starting his business. “I had started a business that I thought could rake in high revenue figures. But the number of people I sold my services to was not good enough to break even,” he says. The problem was in the audience he marketed his services to. “I later discovered that I had not actually identified the correct customers for my business. This meant that my marketing efforts were going to people who were not interested in the services that I was offering,” he says. You should also question whether you have been offering your products and services to people who actually need them. 

The customer is king

This is not a cliché. Your products or services must be a reflection of your customers' needs. “Consistently ask yourself how your products or services impact your customers, what kind of relationships your customers have with your workers, and what levels of referrals you are getting from your primary customers,” says Njenga. Currently, needs and wants have changed as people strive to get back on their feet after months of being socio-economically subdued by Covid-19. Don't sell what people don't want to buy right now, lest your recovery derails.

The big trim

What is the value of the costs that your business has been incurring? Most start-ups are held back by costs they shouldn’t be having. “There are many cost items that businesses take that add no value to their books,” he says. To turn things around, you must identify and nip them in the bud. “Each business has fatty areas that need trimming. Check what yours are. Is it a bloated workforce, low re-investments into the business, or undue operational expenditures?” says Mr. Njenga.

Profit re-investment

In Kenya, Centum Investments is one of the businesses that have implemented a zero dividend policy in favour of re-investing profits. From 2009 to 2016, the company had a dividend drought as it used its profits to boost its cash balance. As a result, the company has been able to make strategic investments in the economy’s key sectors and largely maintain a profit growth momentum. This is a strategy you can implement. Instead of rewarding yourself with every coin your business makes, find ways to plough back profits into the business. Your growth will largely depend on the strength of your cash balance.

The team behind you

Evaluate what role your employees play in the current state of your business. You might have to replace some. Over and above, Chris says you must ensure that your business has the right working relationships and adequate autonomy among its workers. “In my case, I created a new performance review system that was in line with the business goals. I also invested in training and development of my workers, and a cross-functional team focused on continuous improvement,” he says.