The Business of Survival for Expat Businesses & Contractors
WWC - Coping with Coronavirus
IN THIS SERIES OF ARTICLES TO HELP EXPATS DEAL WITH CORONAVIRUS, PROACT SAM EXPLORES HOW EXPATS CAN PROTECT THEMSELVES AND EXPLOIT OPPORTUNITIES PRESENTED BY THE PANDEMIC.
Part 12 - The Business of Survival for Expat Businesses & Contractors
How can we progress the business of survival for Expat businesses and contractors during and following on from the Coronavirus crisis? ProACT’s Sam explores the answers in our series WWC - Coping With Corona.
In April 2020, the IMF (International Monetary Fund) predicts a worse recession as a result of the corona crisis than the recession experienced during the depression of the 30’s. Will the recession be that deep or prolonged?
I challenge that thinking.
In the Deep Financially
WWC - The World War on Corona will not lead to a financially induced recession like the 1927 or 2008 stock market crashes.
WWC has created an economic shutdown as consumers are locked down. As a result, there will be less economic activity in 2020: as an estimate, perhaps a 30% fall on the year (maybe more, maybe less).
You could argue that 10 years of austerity and deflation after 2008 was, in effect, the ‘Great Depression’ of the 20th century and this was certainly financially induced.
WWC - Coping With Corona is different. What we are experiencing now has been created by a ‘world war’ on a pandemic, not through financial loss. It involves governments funding the ‘war effort’ this time in the form of loans, grants and subsidies to business and employees, not by funding bombs, bullets and destruction.
After World War 1 the ‘Roaring 20’s’ became a period of innovation and investment, leading to boom and growth. That was up until the 1927 stock market crash burst the bubble and led to the financially-induced Great Depression of the 30’s.
Seeds of Growth
After WW2, the world again experienced an unprecedented period of stability, economic growth and prosperity following investment and innovation. Even before the end of WW2 in 1944 the governments of the world met in the USA to create the Bretton Woods agreement and a new world order for the financial world which still exists today.
This included setting up the IMF as a global world bank to provide financial support to sovereign governments around the world and to fund the rebuilding of their economies.
After WW2, consumers (who had also been locked down) were released and consumer demand fuelled exceptionally strong economic growth in the post-war period, lasting 30 years.
This could be the future, sowing the seeds of future prosperity, for when we win this war, WWC.
World of Opportunity
Business generates jobs and taxes. Employees receive money to spend, businesses spend to produce more and they both pay their taxes, which the governments spend again.
These are the consumers that could fuel the future.
First a business must survive, but survival is not a long term strategy.
Surviving and Coping With Corona in WWC is a short term and possibly brutal management action which will need to be adapted by businesses for the new world ahead.
Businesses cannot wait until the end of the war to consider the changes needed. That may be too late.
A business must review its cost base, what it is doing, can do, and will be able to do. The business strategy must be reviewed and reset. There is likely to be 5 years-worth of business and technological innovation in the next 12 months.
We can already see this with online education, online working from home and video conferencing meetings.
In Cyprus, what has previously been a highly paper-based government tax, social, immigration and banking system is moving from the 90’s to 2025 in weeks not decades.
Government services around the world for ID, passports, medical cards, driver /car registration, grants and subsidies have been forced to end years of complacency that retain old paper ways to get these online.
A cashless society is emerging as ‘dirty’ money is ostracised and consumers migrate to online payments, ecommerce and delivery services.
Every business needs to examine and embark upon radical changes which were almost unthinkable at the start of this decade - only 3 months ago! The future is here!
With significant innovation and a practical migration to online working, shopping and education as well as more work being done from base at home (cutting out the time and cost of commuting), the world of business innovation will drive technology that creates;
cost reductions in manufacture and service delivery
price reductions to consumers
enhanced service levels and more for your money
A business needs to anticipate what post-WWC consumers will buy and how much they will pay for it.
Battle Plans
Even now in the midst of lockdown, look up and around you to see spring blossoming all around. Innovative local, regional and national initiatives are creating new activities, new opportunity and new business.
Motivated manufacturing companies are switching capacity and resources to create products which are in demand right now. Service and supply companies are hiring and creating new channels to deliver goods and services.
This is the beginning, and it could favour big business.
Contractors and small businesses can also provide innovation in what they do and how they could supply their goods and services in the boom ahead. Survive until then. Survive the war and opportunities will arise for on-demand consumer services. These might be based around the same basic services, but delivered differently.
Will a small business previously relying on face to face customer contact, have to move to online connections only? If consumers accept these goods or service online, then such a service business could move from local, to become a regional, national and even international service provider across borders.
How will consumers behaviour change permanently? What are the tools for adaption, or the alternative technology-driven solution for business and retail consumers?
Consumers will change what and how much they spend in different sectors.
What resources, people and training will your new world order business need?
Retail businesses faced with a protracted release from lockdown, will also face new consumer concerns. Post-WWC, these retailers will be required to adapt their offering. They will, for example, need to demonstrate consideration for public health, which is likely to include wearing masks and deep cleaning to secure consumer confidence.
Ammunition
What is the purpose of business? If it is only to service consumers then these businesses could die of Corona. Should a business look after the workforce as if they are its business ‘family’? Or is the sole purpose of a business to remunerate shareholders?
The balance can vary by company but involves an element of each.
Key to the survival of a business during WWC - Coping With Corona is to maximise any government-backed support to retain employees and workers. What is available to businesses in the form of government loans, grants or subsidies?
Small businesses could be left behind. They may need guidance to secure grants, enable employees to be retained and thereby retain their business structure post-WWC.
In the short term, small businesses could consolidate around big business, benefiting from new emergency contracts being granted to big business in the fight against the Coronavirus. Who cares where the government funds come from? Your business needs the funds to thrive this spring.
Tax returns and payments have been varied. Again, a deferred tax payment allows a short term boost to a business’s cashflow. Skilled management and the adoption of revised business strategies could mean the difference for survival to the end of WWC - Coping With Corona.
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