Since the COVID-19 pandemic was declared by the WHO on March 12th 2020, businesses and individuals have faced numerous challenges ranging from meeting customers demand, inadequate supplies, registering doubtful debts and many more. Although we have seen improvement in the number of new cases in most countries, experts also express concern about a possible second wave of Covid-19 as restrictions are being eased in most cities.
In this article, Momodou Fatty (CPA UK) highlighted five ways businesses should be prepared for the second wave of Covid-19.
1. Identify reliable supplier(s):
The pandemic has caused a shortage of raw materials, merchandises and even labour in some sectors. This was a result of the fact that most Gambian businesses rely on external or foreign suppliers. It is now high time to consider alternative suppliers of the goods & raw materials. By doing this, your business may stand at a better chance of operating even after the second wave hits.
2. Identify your customers’ behaviour pattern
As more Covid-19 positive cases emerged in the Gambia, the government has introduced many forms of restrictions. This has forced more customers to begin to think of alternative ways of shopping; eventually, most customers prefer online shopping. If this was the case in the first phase from your business data, then get your business a supplementary way of serving customers. It would be best if you considered to launch an online sales platform and offer deliveries to customers doorstep. This new channel may yield your business more sales and maintaining customers loyalty.
3. Limit your Credit Exposure
Many businesses have closed down; staff became redundant, and this has led to low income or zero income for some people. The need to borrow from businesses has increased thus resulting in inadequate ability to repay. As a business manager, it is worth considering the maximum credit exposure you could take. For example, you could set a limit of D200,000 as the maximum credit exposure for a business with an annual turnover of D1,000,000. Setting exposure limit would aid your business a healthier survival; hence it may not be faced with cash flow problems.
4. Invest surplus funds in Treasury Bills and Term Deposits
During the first 6 six months of the pandemic, most businesses sales were down, and profits decrease too. To prepare for the second wave, businesses should begin to invest surplus funds into secured assets like Treasury Bills and Term Deposits. This would yield an interest income which could be an excellent avenue to cover up the loss in sales revenue. For example, investing D250,000 for 6 months with an Interest rate of 5% will yield you D12,500. This interest income could help your business survival.
5. Limit or Cease Acquisition of Assets
As most Gambian Businesses are already faced with low profitability, it is worth considering to ceased planned acquisitions of assets. Maintain the existing assets and repair at a reasonable cost. This may help improve your business a good cash flow position.
We all have seen the impact of COVID-19 on businesses around the world. The second wave may come, and it best you consider some of the above ideas as you prepared to survive during these challenging moments.
By Momodou Fatty
Banker and accountant