I recently met a gentleman taking up his MBA class. I asked the wrong question. “Where are you in your course, and do you need another year to complete it?” The gentleman said that most MBA courses could complete in a year. They hold classes mostly online and would occasionally meet face-to-face in a hybrid setup.
Thinking deeper into this gentleman’s response made me reflect on many things. While this gentleman is taking up his master’s degree in one of the country’s top business schools, you and I have just gone through a COVID-19 Business School, and we must learn and remember the lessons.
1. The unprepared are the hardest hit
While we cannot prevent a pandemic from happening, we could have minimized its impact on business had we prepared during normal times. It is not good to put all your eggs in one basket. A manufacturing company supplying only one big client and enjoying its exclusive arrangement now finds itself out of business when that one big client stops ordering.
If your business requires a physical presence, you should immediately consider ways to shift operations online and generate sales. The whole world has gone online. And since business now takes place online, we should have provided an alternative internet provider so that business does not stop when one has an outage. And to set up remote teams that can continue operations even if outages happen.
2. Healthy margins weather crisis
I came from an industry where products carry little margin, but sales volume makes up for it. COVID-19 Business School has revealed that a business may have a high turnover, but if it has razor-thin margins, a slight shift in customer habits is enough to turn it into a loss-making business quickly. The pandemic has caused significant changes, and many small and medium sized enterprises with low margins have been severely affected while others have been decimated.
If your business survives through this, you must shift your business model that offers more value and provides a healthy profit margin rather than shooting for high turnover at low margins. This shift in your business model protects you against economic risks and shocks in a world full of uncertainties.
3. Have cash reserves
Business people have been trained to practice re-investment with every bit of revenue plowed back into the company to maximize growth, but this kind of growth may come with a cost. If your margins are thin, then a bloated organization does not do you any favor. Plowing all the money back into the business is like putting all your eggs in one basket. A crisis may be enough to destroy your company if you do not have cash reserves. Companies with it are now on a buying spree to purchase companies that can help them diversify their business. They are enjoying the “Fire Sale.” Without cash, then sales dry up. You cannot even continue operations and pay the salaries of your people while your customer delays their payment. So no cash, no operations, and no sales. You will have to either close your business or sell it to one who finds use for it.
Cash is like business food. You can use it to buy valuable assets at lower prices and provide substantial future economic dividends. Always keep some of it in the business!
4. Training is paying dividends
Businesses recovering quickly with little attrition or talent are currently exploring and exploiting the opportunities crises create. I know because many of them happen to be my clients. They have invested in training long before the pandemic. Their leaders are more agile and entrepreneurial; the people are more resilient and in a better situation today. It is a convincing answer to the “training skeptics” executives who keep on demanding to see the immediate ROI for the money invested in training.
Our past two years plus have made life and business complex, but things are improving. The future is bright and will always be better. This place in the middle is messy and confusing, but once we know how to navigate the present with hope and optimism, we are poised to explore and exploit opportunities. Many businesses will recover. But we need to enroll in COVID-19 Business School and resolve to never make the same mistake as before. Train your people now to have the skills and the proper mindset for business growth. Invest in programs that give you and your team the opportunity for super accelerated learning. It would be best if you did this now because time is far more valuable than any other resource, and time is not renewable once wasted.
(Francis Kong runs his highly acclaimed Level Up Leadership 2.0 Master Class Online this Oct. 25-27. For inquiries and reservations, contact April at +63928-559-1798 or and for more information, visit www.levelupleadership.ph)