Legendary investor Warren Buffet once said, “Be fearful when others are greedy. Be greedy when others are fearful.” The economic uncertainty brought about by the COVID-19 pandemic has forced families to slash their budget usually spent on luxurious goods. Therefore it’s high time startups start rethinking about the flexibility of its product and services with respect to the time and cost it takes to meet the market. As the contingency theory states, there is no best way to lead a company, however, reducing operational costs can be an effective move. Here are 5 ways entrepreneurs can turn their business from survivable mode into a thriving enterprise:
1. Supply chain integration
Making the right product find the right customer at the right time results in a happy customer. The COVID-19 situation has created a challenge of production efficiency in meeting a targeted goal. Effective flow of information and strategies along the chain of purchase, manufacture, distribution, and sales can reduce the time wastage and warehouse costs. The managers can ensure that there is no shortage or excess of items by maintaining transparency throughout the manufacturing process. How do you make the task simple? Precise demand forecasting, determining the production capacity of each uni and, balancing low inventory with high availability.
New goals are set up to cope with the new normal and need to be fulfilled within a limited time frame. Fruit-related companies, for example, can try their hand at jam production to contribute to revenue and reduce production loss. A shortage of expertise and strategies can be a big hurdle in this situation. Here, outsourcing stands as a solution. It shifts the work hours from full-time employees to the freelancers or outsourced experts. Moving beyond the geographical boundaries to reach the potential pool of experts through outsourcing can improve efficiency and can lead to higher productivity.
3. Work from home
Saying “Yes” to technology has become the only answer for most companies to frame the current economic crisis for the short term. Remote-working gives employees more autonomy and flexibility which contributes to higher productivity. It also reduces their cost of commuting to and fro from work. The employers can save money allocated for rent expenses as well as from the cost of stationery items as demanded in the physical workplace. However, strong internet connectivity and comfortable working spaces at home are the priorities in this regard. Lack of effective supervision, deadline uncertainties, and interruption due to personal responsibilities are the drawbacks that need to be addressed.
4. Cutting inefficiencies
Tightening the financial drain in material or time can cut the expenses for a business. Using mail rather than letters can reduce the cost of paper. Custom hiring of machinery rather than buying them can be a method of adjusting the finance in the current situation. Scheduling the time of business operation working 8 to 5 to working 12 to 5 as per the flow of customers can reduce the electricity bills. The rotation of working hours of employees can be a better alternative than laying them off. If a service is out of use, then canceling them can reduce the variable costs. In case of less frequent use, looking out for more efficient services can cut off inefficiencies.
5. Reviewing strategic plans
The lockdown has restricted mobility for many companies and confined their employees to work through computer screens. This is a good time to look back at the balance sheets and cash flow statements and rethink the company’s strengths and weaknesses. Now is the need to review the strategic plans to create demand-driven production. New market-entry strategies, customer retention strategies, product innovation, and marketing strategies are to be transformed post-COVID-19. The hotels with international tourists are gradually adopting strategies to include domestic tourists in their customer segmentation. Then why not you?