If the economic fallout of COVID-19 has taught us anything, it’s that resilience is the key to survival. Although it is truly an unprecedented time, economic hardships of the past, such as the crash of 2008-2009, have provided lessons in resilience.

As Kevin Sneader and Shubham Singhal of McKinsey write, "McKinsey research on the 2008 financial crisis found that a small group of companies in each sector outperformed their peers. They did get hurt, with revenues falling about the industry average, but they recovered much faster. By 2009, the earnings of the resilient companies had risen 10 percent, while that of the non-resilients had gone down almost 15 percent. What characterized the resilient companies was preparation before the crisis—they typically had stronger balance sheets—and effective action during it—specifically, their ability to cut operating costs."

According to McKinsey, that advice is still sound, but doesn't quite go far enough in the era of COVID-19 because resiliency, for many, will now require rethinking their business model.

Anticipation and Preparation

One major takeaway from the coronavirus crisis is that you can never be too prepared for the future. One positive to come out of this otherwise gut-wrenching ordeal is that businesses now have an idea of what can happen in the event of a major pandemic. We now have a sense of how we can remake our businesses to stand up to similar obstacles in the future.

Reexamining the business model

Resilient businesses today must take a long, hard look at their business model and how it holds up to consumer behavior during a pandemic, as well as subsequent restrictions that may be placed on businesses by the government.

Is your business relevant in the "new norm?" If so, is that relevance sustainable? If not, what are consumers' current needs that you could conceivably meet with a business pivot? Finding the answer to that may be key to your future success.

We've all seen how businesses deemed "essential" have been able to remain open when others have been forced to close temporarily. Is there a way you can position your business to be essential if similar circumstances should once again arise?

Reconsidering the supply chain

As you tweak your business model, you may need to also tweak some logistics. Take a look at weak points in the supply chain and look for ways in which they can be improved. Initiate conversations with suppliers and partners to look for ways in which all parties can benefit and prevent major disruptions during unforeseen conditions.

Place new emphasis on flexibility and agility

The pandemic has forced businesses to think on their feet and discover areas of flexibility that were never explored in the past. It's time to embrace that flexibility for a more permanent way of doing things. Resilient businesses are flexible and agile, ready to continue operations in the face of extreme challenges.

Work to optimize productivity and automate tasks so that workers can be focused on tasks that require a human touch. This breeds efficiency, which is ideal for agility. Continue to enable remote work when possible so it will be a less drastic disruption if it again becomes a necessity.

Explore ecommerce options that give your customers more flexibility to conduct business with you, so that you can continue to sell even if you have to close your doors. This includes flexibility in payment options. Reduce friction as much as possible so that it is as easy as possible for customers to pay you.

Customer service and loyalty are key

Perhaps the most critical element of all, when it comes to resiliency, is your ability to foster customer loyalty. You want your customers to stick with you through good times and bad, so it is imperative that you continually provide top-notch customer service and build relationships that keep them coming back. A loyal customer will always want to support their favorite business, so it behooves you to always keep customers top of mind.

2020 has been a difficult year, but there have been difficult years in the past and there will be more in the future. Resilient businesses figure out how to plan for the challenges that lie ahead and then meet them head on and come out stronger on the other side.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank. Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC