How can businesses adapt to the new norm?

Throughout history, companies that have been quick to adapt have emerged victorious through severe economic downturns and recessions. Here is how effective planning can help your business to thrive in the new normal.

How can businesses adapt to the new norm?

The full impact of Covid-19 in Singapore is yet to be seen. However, throughout history, companies that have been quick to adapt have emerged victorious through severe economic downturns and recessions. Crises often create long lasting changes in the way businesses are conducted, and business owners should ensure that they plan for the longer term.

When the Covid-19 pandemic spread rapidly in early 2020s, businesses across all sectors had to respond quickly to new regulations and measures. However, just as it seemed that existing restrictions were about to be lifted, new measures were put in place with the spread of the Delta variant, throwing a spanner into the works of businesses who were preparing to rebuild.

Here, we shed some light on how few of our clients were prepared for such a situation and how this enabled them to survive and strive despite the many challenges they faced.

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Three key takeaways for businesses

1. Adapt and innovate

Covid-19 has forced (and permitted) people to unlearn old habits and adopt new ones. Companies seeking to emerge from the crisis in a stronger, and more competitive position must develop a systematic understanding of changing habits.

Business owners should set aside time to plan and strategise to set the right direction for the road ahead, observing market trends and to identify solutions that can improve efficiency.

2. Reviewing your business model

The demand and supply shifts caused by Covid-19 and changing consumer habits may have disrupted your existing business model.

To figure out what business model the new normal requires, you need to ask basic questions about how you create and deliver value, who you’ll partner with, and who your customers will be. For the vast majority of companies, responding to demand shifts will involve at least some digital transformation—and probably a significant level of it.

Together, these factors explain why, in a survey of Fortune 500 CEOs, 63% said the Covid-19 crisis would accelerate their technological investment despite financial pressures. Only 6% said it would slow it down. But to make a difference, those IT investments should focus on specific business-model innovations to address new opportunities, rather than increase the use of digital technologies in general.

3. Planning and budgeting

It may be psychologically hard to do during a crisis, when cash flows are stressed, but now is precisely the time to take a few well-considered risks.

Rather than hoard cash, CEOs need to engage in more-aggressive capital investment. To avoid that trap, evaluate your capital investment projects along two dimensions: their estimated value tomorrow, after considering the impact of demand shifts, and the amount of money needed to keep them alive today in light of often constrained operational cash flows.

The economic impact of Covid-19 has affected all businesses regardless of which sector they are in; they are no different. This pandemic has detrimental effects on cash flow and requires businesses to take immediate action; others are at a stage where it is essential to adopt contingency plans for an economic downturn.

It may seem counterintuitive to plan for tomorrow when today is unprecedented. Nonetheless, Mazars believes now it is the time for a business to undertake a comprehensive review of its historical performance and identify growth initiatives and options it might undertake to emerge from stronger from the Covid-19 situation and achieve sustainable growth in the future.

How we can help

Today and into the future, companies that thrive are the ones that have strong business foundations and strategies, adopt technology and innovative processes, and grow their overseas presence.

Mazars works with clients on financial management under Enterprise Singapore’s (ES) Enterprise Development Grant (EDG) programme which helps Singapore companies grow and transform.

Furthermore, as our client has also taken the opportunity to digitalise some parts of their business, it is noted that technology is not about fancy and expensive high-end solutions. You can kick-start your technology journey by taking simple steps to automate existing processes and improve productivity. The Productivity Solutions Grant (PSG) supports companies keen on adopting IT solutions and equipment to enhance business processes.

Find out more on from our privately owned business advisors on how to optimise on your business and setting the right direction for the road ahead.