The Effects of the Covid-19 Crisis on SMEs

Q1. What will happen next? What does it take to reimagine a business and bring it back successfully in this next normal??

I think we need to be ready for the “low-touch” economy, which I first heard from a smart group of Belgian thought leaders - their company is called the Board of Innovation. We will be affected on all fronts - family, social, and professional.

Thus this is not just about returning a business to what it was. It's where we imagining what should be given the changes that this current pandemic has created and I think there are five essential steps.?

1. Review your current situation - redo your cash flow to determine whether you have enough cash to survive. Look at cutting costs, while retaining your current business model, even if you are in a lockdown situation.
2. Focus on revenue recovery and that really means understanding your customers looking at it hard after they've been impacted. Segmenting the customer base and then focusing on the segments where you have something to offer that is distinctive because that's going to be especially required in this next normal.?
3. Rebuild operations - you can't just go back to the store in the supply chain that you had or the manufacturing process that used to exist. It's vital to understand how your business needs to change and evolve. We have already seen people start to do that.?
4. Be agile - The new economy needs to have quicker decision-making processes that can make that something that is lasting - during the past two months we have seen more decisions taking with less data, and you may need to change your business model immediately. That's the kind of pace and speed which next normal will demand - the Pareto Principle (80:20) is alive and well!
5. Find ways to operate more rapidly using digital commerce, and also digitizing internal processes. For example, telemedicine automation.?

Q2. What do you think about the response by the various world leaders?

I have only seen a few of these, but we have seen some excellent responses for the leaders of countries such as Germany, New Zealand, Taiwan, Singapore, Denmark, Iceland, etc. However, at the other end of the spectrum, we have the United States, United Kingdom, and France. I recommend that you read a piece by Peter Sandman and Jody Lanard on the CIDRAP website, which is a masterpiece in crisis communication.

Q3. How would you change the message of the US President?

One obvious change - use the metric of deaths per capita, not the absolute numbers. At the moment, the United States is about no. 8 - countries such as Belgium, France, United Kingdom, Ireland, Spain, Netherlands have had more deaths per million population than the United States.?

Q4. What about the recession?

If you look at the McKinsey and the Economist scenarios it is pretty bleak - this is a depression, not just a depression. This will affect the ability to develop countries to survive - the ability to be bailed out will be curtailed, as I believe that the multilateral agencies such as the work Bank, IMF, ADB, etc. - so developing country markets will certainly suffer, and thus the MSME sector in these countries (I classify a micro SME as having ten or fewer workers, and a micro small business 50 or fewer workers).?

Also, the US, cannot keep on bailing out their own economy, even they will run out soon - and this could lead to social dissent.?

And it is extremely a low probability that a vaccine will be available within the next three years, and if it did exist, would it be only available for the richer countries, such as the USA, China, Japan, Germany, United Kingdom, and not the poorer nations?

Even the issues of testing and contact tracing are easy to talk about but incredibly difficult to implement.?

In order for a digitally based contact tracing method to work, you're going to need 60 70 percent minimum compliance for populations.?Even Singapore, where I live, has only?20-25% utilization rate so that its military personnel are used for physical contact tracing. This would be impossible in a country such as the U.S.

Thus, until you have a vaccine,?large parts of the economy are not going to run the way they did.?A vaccine needs to not only be developed and properly tested, but has to be proven and asked to be manufactured at scale - then distributed with an education process. That's why I continue to think that the economic implications of this are going to get much worse than what we have now.?

Thus, for any review (business continuity planning) for any small business, I would recommend using different scenarios of these main "driving forces" of the economy and public health.

Q5. Do you have any thoughts on the performance of the World Health Organisation?

I have a friend who works inside the WHO who said that they received the first report from Wuhan on New Year’s Eve, and thus the WHO started to set up a team on January 1st.?

The other point, is that politically, the WHO cannot criticize their major donors such as China (or the US) very easily.

Q6. What are the biggest roadblocks for small companies right now?

Everyone is different, but in general:?

• Broken relationships with customers
• Instant drop in demand
• Cash-flow/financial constraints
• Overall uncertainty makes it difficult to plan ahead.??
• Constraints in supply & production
• Political instability