Discussing the 4 Key Phases of the Coronavirus Business Cycle
In part 1 of this series, I identified these phases and briefly discussed what we’ve seen throughout phase 1, along with some of the reasons for the various reactions and flow-on effects for business. I also discussed the importance of understanding the characteristics of phase 2 and how business owners can position themselves for success by using some simple tools to help understand the changing needs of their clients and identify secondary or ‘surround’ products which could be utilised to really add value and meet the changing needs of clients during this challenging phase.
In this 2nd instalment, I will be providing more insight on the phases and associated challenges, and I will also discuss another tool that I believe can help provide greater clarity around business strategy during times of uncertainty.
The 4 Key Phases of the Coronavirus Business Cycle:
Phase 1 – Shock / Survival / Assessment
Phase 2 – Pivot / Adapt and Overcome
Phase 3 – Thrive
Phase 4 – Our new normal
Where are we now?
At the time of writing, level 4 restrictions have recently been imposed for the state of Victoria, which means for the immediate future many businesses are unable to operate to capacity and many are in a state of full shut down. New South Wales and ACT Governments are doing their best to manage their breakouts and Queensland, along with other states and territories are exercising extreme caution to protect their local economies and the ability for businesses to trade.
At this point in time, it’s safe to say that most businesses I’m working with are still in Phase 2 which will likely be the case for at least another couple of months. Whilst I’m sure most businesses are looking forward to Phase 3, the harsh reality is that many business owners will likely have some time left navigating Phase 2. This will continue to be the case until we’re able to achieve a level of predictability if not a certainty for business’ operating environments.
What more can be done?
In part 1 of this series, I discussed the Product Surround Model as being an extremely effective tool that can be used to refine or develop a business product or service offerings. Here at Advivo Accountants and Business Advisors, we’re urging our clients and friends to keep revisiting and challenging their existing plans and actions to ensure the best possible iteration is that which is currently being implemented. In times of adversity, the best iteration is likely going to be a moving target which should be continuously monitored.
For this reason, I’m going to share another tool which I believe is invaluable for shaping strategy during times of uncertainty, and that is the Strategic SWOT tool.
Strategic SWOT
Most business owners will have heard of a SWOT analysis that identifies the Strengths, Weaknesses, Opportunities, and Threats applicable to their situation. I find that whilst many business owners will use a simple SWOT to identify various elements to be aware of, they do very little to apply them strategically and understand their potential impact on each other to help shape their business model and strategy. A Strategic SWOT on the other hand builds upon this base model helping business owners do exactly this.
Relevant questions to ask during the Strategic SWOT process include the following and ideally, you would brainstorm to come up with at least 3x strategies for each.
- How can these strengths be used to commercialise those opportunities?
- How can we use these strengths to mitigate those threats?
- What can be done to ensure these weaknesses don’t ruin the opportunities?
- If the weaknesses were to combine with the threats, what corrective actions will need to be taken?
Once at least three strategies are identified for each (twelve in total), pick your top three and set about putting them in place. Like all strategic tools, I believe it’s important, to be honest with your assessment. The value derived from a strategic SWOT is heavily reliant on the quality of those initial SWOT elements identified. These need to reflect the true competitive strengths and weaknesses relevant to the current opportunities and threats facing your business. Flawed assumptions could result in flawed strategies so it’s important to get this right!
During the current environment, whilst a business’s strengths and weaknesses may not change too much, the opportunities and threats will be constantly changing. Therefore, I suggest using this tool alongside the Product Surround Model from part 1 to continuously review, challenge, and revise your existing plans and actions to ensure the best possible iteration is that which is currently being implemented.
What’s next?
The third phase of the coronavirus business cycle will still be out of reach for many dependent on the sector within which they operate and sadly, some businesses may never be able to reach the ‘Thrive’ phase of the coronavirus business cycle. Of great concern is the dreaded ‘cliff’ which I’ve discussed previously as being due to arrive in September when the first round of JobKeeper and cash flow boost incentives will come to an end. It concerns me that some business owners may be operating under the false sense of security provided by their business receiving government incentives. Its important business owners are aware of the cash flow implications associated with government incentives when they cease, and the impacts this will have on their business. We urge business owners to ensure these potentially devastating impacts of tomorrow are considered in today’s decision-making.
There is also talk of ‘Zombie Businesses’ which are essentially businesses that are already ‘dead’ and are only being kept ‘alive’ due to receiving government life support. Exactly which sector or industry these businesses are in will play a large role in their fate and associated timing. For some, it may beneficial to make the tough decision sooner rather than later. For others, it may still be the case that a good pivot/adaptive strategy could include expanding to different sectors where there may be new opportunities developing.
In the coming weeks, I’ll provide more information on how to ensure your business is best placed to navigate these uncertain times, as well as provide more updates on the current and future stages of the coronavirus business cycle.
Here at Advivo Accountants and Business Advisors, we’re dedicated to helping our clients make smarter business decisions throughout these adverse conditions. A key component of our Monthly or Quarterly Service Programs (MSPs) is about ensuring business owners have clear visibility of the timing and impact of any changes in Government stimulus measures being received. This is imperative for smart decision-making. If you would like to discuss how we can help you and your business, please contact us today.
Written by Chris Morris
Partner, Advivo Accountants and Advisors.
