The more tightly a system is adapted to its environment, the more it will be in trouble when that environment changes. Responding to these shifts is always a balancing act: Should we adapt tightly to the new situation, so as to be more efficient within it – or should we stay loose and flexible, letting us more easily make new adaptations in the future?
Every enterprise will need to weigh these considerations in light of its own circumstances. But this way of framing the issue is essential, and should act as a North Star for your business. Simply put: Your role needs to be active, with each move constantly informed by new developments in the outside world. The alternative – remaining attached to old ways, and waiting passively for the situation to take a more convenient shape – is unlikely to work out in your favour.
The road ahead is winding, and the way forward will be difficult indeed in many industries. Yet the companies thriving in a post-COVID world will be the ones that learned to re-invent themselves during times of adversity. The following three practical guidelines can provide a solid basis for that reinvention:
Every unexpected event creates new opportunities. Your direct competitors were likely as unprepared as you for the COVID-19 pandemic. If your supply chains were interrupted, theirs probably were too – and a competitive advantage awaits whichever business develops the more effective solution.
If your entire industry has been badly hit, then the time may be right to re-imagine the industry itself. Since this final step is the most difficult to conceptualise, an example seems in order. Let us look briefly at restaurants, which have been hit hard by lockdowns and social distancing rules.
Some restaurants have closed down due to consistently low seating numbers. Others have partnered with food delivery apps to deliver meals to their customers’ doors. But there is a third alternative which has largely gone unexplored. Restaurants could ignore the delivery apps, hire their own drivers, and then train them to serve. These well-equipped deliverymen can then re-create the true dining experience in their customers’ homes.
By introducing himself upon arrival, unpacking each dish in the customer’s own dining room, garnishing every plate, describing its unique flavours and the preparation process, then lighting a candle from his pocket as a final touch, the restaurant can market this premium experience as a clear step above what delivery apps are presently prepared to offer.
The difference here is not about resources. Any restaurant can find drivers, and any driver can put food on a table while saying a few words. The difference is in strategy, awareness, and a willingness to let go of the past.
Letting go of the past can allow your business to look at its present opportunities with fresh eyes. Could new technology allow you to expand into additional markets? Could you use your present skills to deliver value in a new way? If so, re-define what you do until it takes full advantage of your current situation. When the door in front of you is locked, step back and find another.
Strategy, of course, depends on having room to breathe. For most companies, debt and loan renegotiation will play a vital role in providing that room. Survival in the short and medium term will take precedence over any other concern, so all options should be on the table.
You should pursue cost-saving opportunities wherever they appear, and do so with an eye toward the strategic goals we reviewed earlier. Outsourcing non-essential tasks can substantially reduce overhead, while keeping your core team focussed on the operations that matter most.
Part of the restructuring process may also involve selling parts of the business that are less likely to contribute to your overall strategy. Additional liquidity may also be within reach, in the form of loans or grants. Now is not the time for timidity: Wherever government stimulus money is available, your business should be looking to get a piece of it.
Thanks to the Thai Bankruptcy Act, restructuring has another benefit which could be even more important than the money it makes available. If your business has already incurred debts of over 10 million baht, the restructuring process alone can provide automatic protection against bankruptcy procedures. When carried out under court supervision, restructuring your operations prevents creditors from enforcing security or repossessing leased assets.
In short, you get a temporary lifeline if you need one – which means an extra shot at profitability. Thai Airways is among the many companies that are formally reorganising as a way of staving off liquidation.
Taking advantage of these formal protection rules gives you space to step away from your creditors, and focus on the necessary strategy and structure fixes mentioned earlier. The tactic, however, depends on court approval – and your company must make a reasonable case that its restructuring plan could lead to a better outcome for all parties.
No time to waste
Even if a COVID-19 vaccine were to become available tomorrow, no economic equivalent can be so easily applied to businesses weakened by the virus. Solutions must come from within your company, but the right advisory service can show you the way forward.
Grant Thornton in Thailand can help you stay focussed and guide you through the necessary practical steps. By facilitating your business transition, we will ensure that your entire operation is well adapted to the economy of tomorrow.
Each day your business spends in limbo is a lost opportunity. Breaking free is a real challenge, but with the benefit of a well-adapted strategy, streamlined structure, and financial breathing room, you can chart a successful course forward for your business once again.