The pandemic could have long-term implications for bankruptcies. High-profile companies such as Boeing were forced to file for Chapter 11 because of the pandemic, even as they struggled to cope with the pandemic. Coronavirus-related bankruptcies could reshape the economy and the way the world does business in the long term.
Companies that lost money during the coronavirus epidemic will have years to make it up, the federal government has promised. But the promise of a long runway won’t be enough to bring some of the affected firms back to full strength. Some companies have struggled to find new revenue sources. They are also still struggling to figure out how much they cost, and whether they can even afford to pay back the federal cash on hand.
Results We Have Now After Pandemic
The pandemic has left businesses with cash flow problems and future cash flow shortages, but it has also brought forward the worst-case scenario: a company that cannot pay its debts, and that may not have enough cash to maintain operations.
Some small businesses may have years to pay back their COVID cash advances. The pandemic has disrupted supply chains and slowed down business operations, which has left some businesses with the extra cash they need to repay their loans. But companies that have pandemic contingency plans in place will have enough time to prepare for the expected impact and recover from the pandemic, even if it takes longer than expected to clear the virus from the population. It is important to have essential tools that will guarantee a real recovery from the previous pandemic and will not allow struggling in a case of a new one.
6 Ways to Help Small Businesses Recover
- Businesses get digital. Today, 75% of small business owners are finding it challenging to get back on their feet. Small businesses across the country are learning that they cannot rely on their traditional advertising and marketing tactics and are looking for new ways to connect with their customers. To recover better from the pandemic, small businesses will have to make a concentrated effort to improve digital strategy and practices. They will also need to use other channels to tell their stories, such as social media, email, and even print. This means that all the presence and all the business processes should switch to a new digital reality where even a simple brick-and-mortar paystub should be issued online.
- Businesses build strategic resilience. Small businesses are an important part of the U.S. economy; 85% of small businesses in the country started with a seed capital of under $1,000. The pandemic has exposed the fragility of small businesses and the need for a stronger safety net to help them recover. So, businesses will need long-term strategic focus to recover from the pandemic. The pandemic forced many companies to adapt their business strategy, and some may need to reconstruct and restructure their organization entirely to succeed. After the pandemic, small businesses must build strategic resilience to survive and thrive. This involves strengthening operational readiness, building a crisis communication plan, and developing a short-term recovery plan. It also involves developing a long-term vision for the business, building a strong management team, and exploring growth opportunities. Only by building a strong foundation of strategic resilience will a small business succeed in the years to come.
- Businesses determine how deply they have been affected. As the pandemic plummets and companies struggle to keep their doors open, one of the biggest challenges is financial fallout. Recovery typically involves repairing the damage to the company’s finances and then regaining customers, which can take months or years. The pandemic has also impacted the industry. For example, many small businesses are no longer able to offer the same product and service mix as before.
- Businesses adopt new technologies. In the event of a pandemic, companies could be forced to close their doors, leading to widespread economic chaos. But if companies are prepared and adopt the right technologies, they could avoid the worst-case scenario and continue to operate as normal. This is the finding of a new study by the Center for Organizational Research and Innovation (CRI) at Indiana University’s School of Informatics and Computing, which found that companies could use advanced technologies to recover from a pandemic. The CRI is one of the world’s leading centers for exploring the impact of information technology on organizations, with expertise in areas such as leadership, organizational design, and performance.
- Businesses Take a Second Look at Their Business Plan. If you are thinking about a COVID-19 recovery plan, you may want to take a second look at your company’s business plan. Both the financial and non-financial elements of your business plan involve risk and should be treated as such, especially if your company is looking for a loan. Companies who are switching to new business models, such as becoming a service-based business or moving their physical headquarters to a new state, have years to pay back the funds they borrowed during the pandemic. Companies can use a variety of tactics to help with this process. For example, they could offer more credit to customers, increase their operating margin by increasing prices, or even lower their prices. A new plan should provide a business roadmap that enables a firm’s recovery while maintaining its operating philosophy. A business plan should provide a framework for the resolution of the firm’s problems and the direction of its strategy. It should also show that the firm has a method for managing and measuring its performance. Firms that provide a solid business roadmap and a process for managing and measuring their performance, are more likely to have a strong recovery after a pandemic, and to be profitable in the long run.
- Businesses should have a contingency plan for the next crisis after COVID. When you own a business, you’re always preparing for the next crisis. As the world starts to emerge from the COVID-19 pandemic, businesses are looking for ways to protect themselves from the next crisis. While no one can predict the future, businesses can make sure they are prepared for whatever comes their way by having a contingency plan. A contingency plan is a course of action that is put in place in case of an unforeseen event. By having a contingency plan, businesses can minimize the impact of a crisis on their operations and ensure they can continue serving their customers. The current pandemic has forced many businesses to re-evaluate their contingency plans. For some businesses, this has meant making significant changes to their operations to survive. For others, it has meant making small tweaks to their plans to be better prepared for the next pandemic. Whatever your business’s situation, it’s important to have a contingency plan in place. A well-thought-out contingency plan can help your business secure its future and protect its employees, customers, and shareholders.
Final Thoughts
The pandemic has had a profound effect on businesses around the world. Some firms will take years to recover from the cash injection they have received, while others will be able to do so within a matter of months. The key to recovery will be the development of a clear and concise plan that takes into account all of the factors that have contributed to the current situation.
