The pandemic forced many around the world to rethink the way business is done. Very few organizations had plans in place to counter a simultaneous public health crisis and economic downfall. On the other hand, business managers turned to business loan services, government grants, and loyal customers to stay afloat. Here are some of the lessons we have learned together over the past year:
1. Inventory Management
In some industries, companies saw goods fly off the shelves in record numbers. Sectors that experienced increased demand include sanitation, food, and the medical field. For the first time in years, America experienced worldwide shortages in everything from toilet paper to canned food.
Meanwhile, in other industries, buying decreased, and companies held on to inventory for an extended period. Companies from opposite sides of the spectrum shared new inventory management concerns. However, because the cause of those concerns played out differently for both, the solutions differed as well. Companies with high inventory turnover had to focus on strengthening their supply chain. In contrast, companies with low turnover rates focused more on marketing and storage costs.
2. Cash Flow Management
The pandemic compelled both businesses and individuals to reconsider the way they handled money. Companies that had scheduled big improvements for 2020 onward had to revisit these investments. For many business owners, it was devastating to use money set aside for growth to cover working capital, but it became necessary to keep the doors open.
Most businesses also cut spending drastically. For example, the MIT Sloan School of Management reported that small business owners reduced spending levels by 40%. This matched consumer consumption rates, which dropped by the same amount. Conservative spending helped businesses to stretch out the money on hand for longer while shutdowns continued.
3. Future Projections
The coronavirus transformed a booming U.S. economy that experienced record highs to lows not seen since the Great Depression. COVID-19 will drastically affect the way businesses calculate future projections and plan for them. Companies will likely continue to hold on to extra cash reserves for some time to come. This is especially likely as new strains of the virus emerge, and scientists question whether things will ever return to the way they were.
4. Leveraging Technology
The most prepared businesses during the pandemic were the ones that had already invested in technology to stay ahead of the competition. These companies quickly pivoted to online, having the infrastructure to support remote work, online orders, and virtual customer assistance.
Cloud computing has emerged as the star of the technology lineup during the pandemic. Over the past year, cloud adoption drastically increased. Forecasts now estimate $304.9 billion in cloud spending for 2021, representing an 18.4% growth in the industry.
5. Customer Loyalty
Few customers were looking for new companies to spend money with outside of paying for essential products. Because of this, companies had to bank on customer loyalty in a shrinking market. Loyal customers became especially important for companies that had to cut spending on marketing and public relations to cover working capital expenses.
Forbes estimates that it costs five times more to attract new customers than to nurture existing ones. Companies in hard-hit industries learned this the hard way.
6. Financial Partnerships
Companies that rode the pandemic wave and came out on top have one main thing in common: capital. While some organizations were able to generate capital due to unprecedented demand, others had capital held in reserve that they tapped into. Many businesses, however, relied on disaster relief grants from the federal government.
For most companies, these sources did little to fill the gap, compelling companies to turn to fast business loan services from trusted financial partners to get the funding they needed. Without this financial partnership and the capital received, they might not have had the resources to weather the economic storm.
At LQD Business Finance, our commitment to a flexible way of doing business made it easy for us to adjust to our clients’ new needs. From changing the way we do business funding to launching the development of a crypto-backed lending platform, we are eager to show our clients that we’ve been listening to their concerns. Start your application process today!