The Biggest Business Impacts of the Coronavirus
Every business across the world has been touched in some way by the coronavirus emergency, with some seeing stark, troublesome results and others seeing sales rise. We’ve put together a few of the most pressing impacts that businesses are seeing in this ever-changing landscape.
- Cash Flow Has Slowed at Many Firms
Many businesses are seeing cash flow sputter, and chief financial officers are certainly feeling the heat that’s come from this uncertainty. Nowhere is that more obvious than in PwC’s most recent survey of CFOs ( Outsourced CFO).
PwC polled 55 finance leaders across the US and Mexico to get a feel for their sentiments regarding the current and future business landscape through the lens of COVID-19. Because PwC asked the same questions during the week of March 11 as they did during the week of March 23, the firm was able to see the differences between how CFOs felt then and now — and the findings show great concern.
Whereas 54 percent of CFOs said they believed coronavirus would have the “potential for significant impact to our business operations, and it is causing us great concern” in early March, that number rose to 87 percent later in the month.
And while about 34 percent of the finance leaders who expected the COVID-19 impact to be “limited to specific regions in our business” back in early March, that number fell to just nine percent at the end of March.
As for how the coronavirus will affect profits, those concerns have worsened as well, the report shows. “Eighty percent of finance leaders now say they expect a decrease in revenue or profit for the full year,” PwC notes. “Two weeks ago, only 58 percent anticipated decreased revenue and/or profits in 2020, and 40 percent said it was difficult to assess.”
- Supply Chains Are Disrupted
Almost 75 percent of US-based companies are reporting supply chain disruptions due to the COVID-19 emergency, with a variety of factors responsible for this issue. First, because many supplies come from international companies, some production plants abroad and at home are shut down, and some products are prioritized (such as items needed by health care professionals), leaving other items behind.
In addition, many workers are quarantined, sick or under stay-at-home orders, leaving many supply chains running using a skeleton crew. A recent survey by the Institute for Supply Chain Management shows that lead times have doubled for most US businesses, and it’s become a challenge to get orders filled.
This can lead to a domino effect when companies aren’t able to acquire the supplies needed to keep their businesses running. It can cause cash flow issues, disgruntled customers, empty shelves and other problems.
- Remote Working Capabilities Are Necessary
Another result of stay-at-home orders is that many employees are shifting to remote working rather than heading to the office. Working at home is the new normal, requiring many companies to invest in new technologies and equipment to enable staff members to adapt to remote work.
Not only are strong internet connections and conferencing software a necessity, but other issues must be addressed to ensure that remote work runs smoothly. For instance, companies have to keep connections secure even when employees aren’t in the office, to protect client and corporate information. In addition, managers must know how to manage teams from afar, which can be challenging without face-to-face meetings.
- Some Categories Are Thriving
Of course, the effect of coronavirus isn’t negative at every firm. Some businesses are thriving as they produce services, items or products that are absolutely essential during this time. A sampling of such firms can be found here:
- Mobile Order/Delivery Firms.
Coffee tech business Joe Coffee says it has been “absolutely swamped” recently, CEO Nick Martin told GeekWire. The reason? Local shops are trying to find ways to provide social distancing options while still staying in business, and the company’s technology allows them to do so. The same is true of businesses like Domino’s, DoorDash, Amazon and Instacart, which deliver foods, groceries and other items that people need but can’t get due to social distancing. These are among the brands that are working to bring on more employees during the crisis, according to The Hill.
- Medical Marijuana.
Medical marijuana sales rose by over 20 percent during the week of March 16, hitting a record high, according to analysts. Dispensaries in certain states are considered “essential businesses,” but customers who feared they may not have access to cannabis made their way to dispensaries to stock up in case closures might be looming, the Philadelphia Inquirer reports. Not only are more customers visiting these venues, but they are buying more at a time, according to one dispensary owner in Washington, D.C. Such stores are ensuring that customers take social distancing measures, limiting the number of people allowed in a dispensary at any given time, Washingtonian reports.
- Grocery Products Like Fresh Meat, Sanitizer.
As consumers flocked to grocery stores, meat department sales rose by nearly 77 percent during the week ending March 15, data from IRI indicate. Sales for beef rose by $376 million and sales of chicken went up by $183 million, Agweb reports. Nielsen data indicate that hand sanitizer sales rose 470 percent the week ending March 7, while aerosol disinfectant sales were up 385 percent and bath/shower wipes rose 180 percent, NPR reports. And that old standby toilet paper saw sales increase by 60 percent during that week, the report notes.
- Businesses Must Think Differently
Many small- and medium-sized businesses are wondering if they’ll be able to keep employees on the payroll during a downturn. You have options that can hopefully prevent you from having to lose good staff members — consider talking to your employees and brainstorming. Do they have other capabilities and talents? How can you use those skills to pivot your business into one that will continue to thrive in this climate? For instance, perhaps you have one salesperson who has been offering to experiment with a cloud-based solution to your software that would allow remote workers to unite. If that staffer can no longer travel and make sales, now could be the time to have them dedicate their efforts to working on that solution. You could be able to get it up and running during this period, offering you a new option to offer those who are switching to remote work.
This strategy was emphasized by entrepreneur Mark Cuban during a recent LinkedIn Live event where he discussed coronavirus’ effects. “Since you have holes in your schedule, it’s a great time to experiment with new lines of business and see what sticks,” he told readers.
You may even consider collaborating with competitors to provide shared offerings. Perhaps you can work together to create solutions (Financial and Accounting Outsourcing) that one of you wouldn’t be able to offer on your own.