Small and midsize businesses’ path to recovery will depend on how quickly they can adapt to the changing business environment and incorporate digital transformation.
Very few have yet to experience the daily disruptions the Coronavirus pandemic has introduced to our lives. Individuals, businesses and governments continue to endure the effects of the global pandemic, even as governments roll out vaccines to slow the spread of the virus and return their countries to normalcy. The effects of the pandemic are visible. It has slowed global economic growth, significantly reduced total income across countries, increased unemployment and disrupted lives and livelihoods. For many small and midsize businesses, the pandemic continues to present severe challenges. Governments are trying to mitigate the economic impact with aid programs, but for some small businesses, these programs may not be enough to keep them afloat. According to Yelp, as of December 11, 2020, 60% of closed businesses will not be re-opening.
But there is light at the end of the tunnel. Governments have started rolling out vaccines to help slow the virus and return their economies and businesses to some operational levels. From a PwC US Pulse Survey dated October 6, 2020, 28% of CFOs expect an increase in revenue within the next 12 months. For economies to return to normalcy, small and midsize businesses must return to growth. Small businesses will have to navigate an increasingly complex business environment, as well as adapt to new business models incorporating speed, agility, customer-centricity and digital transformation. They must also focus on training, retraining and developing their workforce.
For a post COVID-19 economic recovery, small and midsize businesses should rethink how they operate. The path to recovery will depend on how quickly they can adapt to the changing business environment and incorporate digital transformation. Below are critical areas that business leaders should focus on as they return to growth.
Revisit Business Operations
It is not a coincidence that digitally savvy organizations that were quick to adapt to the changing business environment and consumer behaviors amid the crisis were the ones that survived. Today’s organization must be built around agility to respond quickly to global shocks and crises. To do that, some would have to diversify their Strategic Business Units (SBUs), reorganize their business processes and reevaluate their core mission and objectives.
The pandemic has changed the way we work. The workplace has changed—more businesses have come to accept the remote workplace made prevalent by the pandemic, and are already realizing some of its benefits. Small businesses must review their existing business operations, processes and procedures to assess which ones they would have to modify to become more resilient to shocks. They will also have to invest in technologies and systems that support remote work and open communication, while maintaining control of their company data in a very secure environment.
Unemployment remains high due to the layoffs from the pandemic. But as global economies recover and businesses begin to operate at their pre-COVID-19 levels, expect labor shortages across many industries, and rising labor cost to hinder business growth. To prepare for this, small and midsize businesses must start investing in automating processes and the technologies that support them. Which processes can be automated? Which ones can be outsourced? Which ones can be done efficiently through project management-based operations? And which ones can be done efficiently remotely? These are questions small business leaders should be addressing as companies recover from the pandemic.
Accelerate Digital Transformation
Digital transformation is a term so easily associated with large enterprises that its meaning is lost to small business owners. Digital transformation, according to Salesforce, is the process of using digital technologies to create or modify existing business process, culture and customer experiences to meet changing business and market requirements.
From a survey by BCG in late spring of 2020, 80% of respondents across industries planned on accelerating digital transformation in response to COVID-19. The high percentage reinforces the need for all organizations to digitally transform their operations in order to be more resistant to global shocks. According to KPMG, the following advantages of digital transformation include resilience, efficiency, agility and customer-centric innovations.
Digital transformation begins in the cloud. Most large enterprises have adopted cloud technologies to scale operations or fend off disruptions. Cloud computing enables businesses to turn IT capital cost (CAPEX) into operating cost (OPEX), enabling them to invest in their core business activities. The cloud provides the platform to businesses to deploy custom applications, scale their infrastructure needs and test and drive innovative digital ideas.
For small and midsize businesses, digital transformations should not involve completely reinventing their operations. Small businesses can start adopting cloud services in a phased approach to minimize business disruptions and costs. They can start by moving their storage and backup systems, or their customer-facing applications to the cloud, while maintaining critical workloads in-house. Today many Cloud providers support hybrid cloud computing.
The key to successful digital transformation is to have a big picture view of your organization’s digital transformation process and to begin the process with a piecemeal approach to minimize disruptions to your business processes. This approach gives you the best chance to learn more about the digital systems, and gives you time to study which works and which does not.