Entrepreneurs around the world deal with economic fallout due to local or international mishaps that impact business in general. The financial turmoil in Sri Lanka is likely to continue for a considerable period into the future. Businesses, in particular, start-ups, must have one mission: survival. Businesses are at a tipping point as we navigate the crisis, and how leaders handle this will make or break the company.
Optimism is renowned among entrepreneurs and is essentially a must for the job. Although optimism is a double-edged sword and may rapidly turn into a deadly weakness in a crisis situation, it is necessary when creating anything new. Hence, acting on irrational hope can be dangerous.
Many business owners will find it difficult to adopt a negative outlook, yet it is vital. The financial situation is dire right now, especially for businesses that are just getting off the ground. Small business operations find it hard to continue due to the diminishing buying power of customers.
Slump
On top of that, they are struggling to pay salaries and deal with other running expenses due to the ongoing slump. The sooner entrepreneurs accept the gravity of the situation and the real possibility that their businesses will fail, the stronger their leaders and decision-makers will become. When the worst-case scenario is known, leaders must act quickly and decisively to reduce costs and manage cash flows.
Considering the current situation in the country, the bitter truth is that some companies may not make it through the crisis unless the leaders radically change their business models in order to survive. Factually, some businesses still have not felt the pinch, although a visible financial slump exists. The gross revenues of these companies have not been impacted due to the prevailing low disposable income of the general public, although their physical volumes have drastically dropped. However, this situation can also change negatively in the coming months.
Any leader who takes a close look at their company and realises that it can no longer be sustained must be terrified. The most fatal error they might make at that time is to reject change and ignore novel concepts.
Therefore, my opinion is that business owners must keep in mind that, most often, they started their companies by defying expectations, upsetting the status quo, and breaking with tradition. Hence, a fearless approach to the new situation is necessary. Entrepreneurs are particularly flexible and well-equipped to change course when things get difficult. The best-expected quality of an entrepreneur at the moment is creative thinking.
Instead of trying to control the situation, entrepreneurs should try to shift their focus to developing new opportunities and evolving collaborative solutions to respond compassionately and creatively.
New perspective
It is a mistake to resist change and not look at the situation from a new perspective and consider the opportunities that may arise.
Entrepreneurs who are attempting to think outside the box can learn many lessons from past global experiences. They must seriously consider answering the new community’s social needs, taking into account expanding new markets, customising the physical product and distribution, and modifying a service or product.
Nobody enjoys breaking bad news, but effective leadership requires keeping your team and partners in the loop during both good and terrible times. People are frightened and uneasy about their employment security. Even if they don’t have all the solutions, it’s critically important for leaders to be open and honest about the difficulties the firm is experiencing.
Entrepreneurs must ultimately act in a way that is best for their companies, which often entails making difficult choices and having unpleasant discussions. When faced with a crisis and must make difficult decisions, leaders who show compassion and openness will gain the loyalty and trust of the team members who stick around.
Adequate communication with the stakeholders is a vital factor in any type of crisis situation, especially in a financial crisis. Every crisis requires increased communication because people need more assurance and details than usual. Specify your intended frequency of communication and stick to it. Waiting for weeks to communicate with your staff and important stakeholders creates a void that will inevitably be filled with unhelpful, rumour-driven panic.
Never postpone any scheduled communications activities. Continue with the scheduled session even if there is nothing new to discuss, to let everyone know that there is nothing new to share at this time. Use this chance to encourage people and outline the strategies being used to continue finding solutions. If you carefully observe, you will find that most large companies keep communicating with their audiences as if nothing has changed. Such strategies can offer long-term benefits.
Transparency
Missing the chance to renew relationships with your existing customers is a mistake. We are all experiencing an ongoing economic slump. Tell your customers that even if the staff is working remotely due to the prevailing hardships, they are still dedicated to providing top-notch customer service. Describe how we are all in this together and how we will all overcome this. Nothing fosters a closer relationship than solving problems in a crisis with your customer in a transparent manner.
Beyond customers, businesses have the chance to demonstrate their true values and support the struggling local community. Hence, entrepreneurs must try to utilize whatever resources are available to aid communities genuinely.
By depriving a firm of cash, using your personal credit to fund it puts the enterprise at a severe disadvantage. This is known as bootstrapping. Bootstrapping also refers to the obligations and liabilities of your company. While you should use your expertise to perform what you can on your own, relying too heavily on your own work can eventually hurt your business. Hence, bootstrapping must be avoided in crisis situations, and one should seek necessary assistance from outside sources whenever possible.
Even if it might not be immediately necessary, you must locate individuals to assist in running the company. Knowing what and when to delegate will not only ensure that you produce professional outcomes, but will also free up some time for you to focus on more vital tasks.
Nevertheless, whatever strategies you have deployed, do not count on instant success. With the prevailing difficult situation, you must realize that the path is arduous. Forecasts are a good method to steer clear of bad situations, yet they may not be realistic due to the uncertain and unclear immediate future in the country. In this situation, Murphy’s Law, “Anything that can go wrong will go wrong,” will mostly apply.
Therefore, you simply cannot predict where you will be in six or twelve months. Market circumstances shift and consumer behaviors alter. Hence, being realistic is good because it can take years for your business to take off. Therefore, budget for enough cash reserves without anticipating high pay for some time. Try to stretch your money by renting instead of buying, outsourcing rather than employing, bartering instead of paying cash, and using other innovative methods.
However, the most important factor in this unanticipated gruesome crisis for entrepreneurs is to be positive, realistically optimistic, and focus on likely market changes. Robust work ethics, passion for business, creativity, perseverance, and self-motivation will sail them through the storm.