Covid-19 is here to stay for the next few years. With second and third waves of infections hitting many parts of Europe and key countries in Asia, the Covid-19 global pandemic is far from over. Marine Small and Medium Enterprises (SMEs) all over the world, from engineering companies, bunkering services, ship suppliers, equipment makers, or any other providers supporting the complex maritime industry ecosystem in some way, have been through a roller coaster ride in the past year.
While in 2020, companies with some cash reserves and assistance from government funds can afford to adopt the ‘wait it out’ approach for things to go back to normal, the employment of the same approach in 2021 may prove fatal. In recent months, some SMEs in the marine industry have been lucky to have their business volume back to normal or even see an increase in business, fueled in part by increased sea freight due to the lack of air cargo, and the surge in online shopping small parcel volume. But even for these marine companies who might be laughing to the bank now, having the optimism that the world will revert seamlessly back to its original state before Covid-19 will be, perhaps, too optimistic or even plain naive.
It is time for the leaders of marine companies to rethink their businesses. Here are three guiding thoughts to help leaders of marine SMEs worldwide to plan their year ahead:
1. Know where you are
Covid-19 is not the first economic crisis that the world has faced. The world has weathered the Great Depression of 1929, the Asian financial crisis of 1997, and the 2008 global financial crisis. Some crises, unfortunately, last longer than others.
For SMEs, we cannot and do not need to ‘guesstimate’ how long this recession will last. We can leave that job to economists or your favourite politician, whichever country you are from. What is important for business owners and managers is to look at where your business is now, and think what the outlook will be like in the next three to six months at a time.
This outlook has two steps. One, consider your financials – especially your cash flow. Two, consider how you will describe the next six months in a paragraph.
Planning/Projection during Covid-19:
Even for those who have prior experience in doing business plans, coming up with projections during Covid-19 may prove challenging because of the uncertain nature of the pandemic. A lockdown or a new wave of infections may occur in key economies that you are operating in. Such situations are near impossible for anyone to forecast. Thus, it is essential to have some flexibility built in your business, and seek buy-in within your organisation, so that you are able to adjust your plans as often as required throughout this volatile global pandemic.
It will also be helpful to know which of the three business stages your company is in currently:
I. Period of Confusion (start of pandemic, 2nd/3rd/new waves)
– A time of sudden and great disruption to your operations
– May have zero business volume because of restrictions imposed by the government
– Business uncertainty may be aggravated by a lack of direction from government or key partners
II. Survival / Collapse of Companies (with the pandemic still ongoing)
– Consumer spending and habits have changed but stabilized
– Many businesses who do not make it have perished
– Businesses who survive (hopefully you!) are operating in an adapted way to manage various restrictions
III. Strong Reborn Companies or New Start-ups (Global sustained recovery)
– Companies which survive will be stronger than before Covid-19, with fewer legacy competitors
– New start-ups formed to meet new needs and fill gaps in the ecosystem
2. Look Inwards
The key thing you need to look at today is your operational efficiency. We are not talking about firing people or changing your delivery van to a bicycle. We are looking at efficiency, not reduction. The best person to do this is you, the leader, and maybe your accountant too.
In an economic world war like this, there are no heroes, only survivors. Sustain your cash flow. In the ‘Period of Confusion’, can you survive with months of zero revenue? Think like a new small start-up company: how can you operate in a very lean manner; collect your money better; lower your inventory; negotiate better payment terms with your suppliers?
Use technology platforms. Look at CRM platforms like salesforce.com, Hubspot, Zoho to help you better manage your customer relationships. Also, consider cheap and efficient tools like monday.com or Trello to help you better coordinate your workflow. Feel free to get in touch with us if you have any questions using these tools. (We are not selling any of these; we are just happy to help.)
3. Fight Forward
We are often asked by our partners what the correct way is to plan ahead. The key guiding principle of thinking ahead is to remember that marine SMEs are no different than companies in other industries. You will emerge triumphant from this pandemic if you have increased customer loyalty through these tough times.
Foresight is key. We need to ensure we put our resources in the right places. Three of the most important places for resource allocation now are: (1) sales and marketing, (2) research and development, and (3) new business development. This is a huge topic but do not overthink it; the guiding rule is that you must take Covid-19 as the chance to bring your business even closer to the customer.
Know what problem the industry and customers are facing now. Understand their challenges. Transform with your best customers. Anticipate and fight their future battles alongside them. When the going gets tough, sell more!
Moreover, Covid-19 has driven individuals and companies online in all sorts of ways. If you have been delaying digitalisation for your company, now is the time to adopt new technologies.
Adopt new digital tools to help your customers with their problems. A great example is Gotrix, which has been developed by marine companies to help ship managers and ship crew handle technical issues more efficiently during travel restrictions.
Unlike the big companies, most SMEs owners and managers, during normal years, hardly have a chance to think about strategic directions as we are constantly occupied with operations and human resource issues.
The disruption brought about by Covid-19 can be a blessing in disguise by providing marine SMEs the chance to rethink the relevance of their businesses for the future, and to pivot their businesses to be resilient and better equipped to face the new world ahead.