Clearly, businesses go through different seasons and cycles. Actually, every business has a development pattern divided into different phases. These phases are:
- Decline, and
The lifespan and extension of each phase is dependent on a lot of things including
- management response to industry changes,
- creativity of employees,
- price, and other business development techniques.
FACTORS BEYOND THE CONTROL OF BUSINESSES
Besides the natural ‘life crisis’ a business faces over its lifespan, business operations are also affected by their immediate environment with factors that are often beyond their control. According to the PESTEL MODEL, these factors are:
- Economic policies or situations and regulations,
- Environmental and
- Legal changes.
These factors comes in form of policies and natural occurrences that businesses can not influence.
An example is the Okada and Keke Ban in Lagos State, a good case of Political/Government influences in terms of policies on the business. The almighty COVID-19 pandemic is a good case of environmental influences on business.
In both examples, nothing really prepared the players/businesses for the major changes that happened. During the Okada ban, a lot of bike-hailing companies had to shut down for a while to re-strategize. Many companies had a similar response during the COVID-19 breakout.
PREPARING FOR CONTINGENCIES
So how do you prepare for contingencies as a business?
Interestingly, the past events have opened our eyes to opportunities that can be explored to minimize the impact of these contingencies.
1. Pandemic Insurance:
More insurance companies are now making this product available for businesses to subscribe to. If there’s a prediction that a pandemic could affect your business line then go for it. There’s some great news in this line too — a company announced an insurance product for farmers to reduce their liability when their farms are exposed to natural disasters in Nigeria.
Honestly, what I mean here is an emergency fund for your business. Just as is applicable to personal finance, it is advisable to have funds which your business can utilise in cases of pandemics. Imagine a situation where the continuation of your business is hinged on providing masks and other safety items for your staff and there’s not enough money in the treasury to even do the most basic things. This could turn out to be disastrous to your business.
3. Diversify Early:
This is quite broad as it means expanding into other markets and also diversifying in terms of products and services offered.
4. Be Creative/Flexible:
Most startups have this advantage over large corporations where ‘redtapism’ prevails. A clothing line does not need hundreds of board meetings before jumping on the nose mask venture because that’s what’s selling. A more recent example is how companies are compromising and meeting consumers at the middle by making making products in affordable sizes. This is what I call the Satchet Revolution.
5. Practice Empathy:
Especially if your customers are also affected. Show them that you care. That’s how they will remember you.
Definitely nothing prepares you for emergencies, but your response to it will determine how long you stay in business. I hope you find these tips useful!