Updated: May 6, 2020
Navigating business challenges during the COVID-19 crisis
We are living in unprecedented times. Not since the 1918 Spanish Flu pandemic have we seen such an impact on people, society, and our economic way of life. Even in the three previous recessions, we have not experienced the impact Coronavirus is having on our daily personal and business lives.
As history has shown us, regardless of recessions or extreme events that impacted the economy, we will eventually get through it and thrive once again. History has also shown us that businesses tend to be reactionary with responses like cutting budgets and employees, as we have seen in this pandemic. As cash is king, when there are unknown business implications, preserving cash is understandably of utmost importance.
Don't get me wrong, I'm not saying I don't agree with this approach or strategy; it’s just that I believe there needs to be a balanced approach to operations and investments – marketing, innovation, and M&A.
That said, marketing is, unfortunately, the first line item to often be cut. Marketing is, in my opinion, the strategic engine for any business as it impacts every department within your company. It provides opportunities for sales, differentiates your brand in the marketplace, and helps to fend off competition. Without it, I believe a business leaves itself vulnerable.
A Historical Viewpoint
When news of the global spread of coronavirus disease (COVID-19) emerged, global financial markets reacted and behaved in ways not seen since the 2008 financial crisis. Fully understanding the potential future economic impact of the virus remains difficult because, as a society, we have never experienced anything like this in our lifetime.
During the Spanish Flu pandemic, large US cities, including New York and Philadelphia, were virtually shut down as their citizens became sick. Like today, businesses were closed, sporting events canceled, and private gatherings banned to stem the spread of the disease.
According to a March 14, 2020 article in Mother Jones, "while the coronavirus pandemic is unlikely to be as severe as the Spanish flu which killed 700,000, the Spanish flu had a surprisingly modest effect on the economy in 1919 and beyond."
Learning from History
The comparison between the Spanish Flu and the Coronavirus is not meant to downplay the impact of the current pandemic or the Spanish Flu, but to point out that in the long run, the effect on our economy may be short-lived. How short-lived is defined is another article!
"This, of course, is wonderful, thank you very much, but I didn't live in 1918, and the Coronavirus is impacting me plenty!" said one of my earlier readers of this article.
I don't disagree. This pandemic is wreaking havoc on most businesses and the people who work for them. Not on all of course, as some businesses are thriving and growing as a result of these unique societal and behavioral changes. Companies providing technology to assist with the "new normal" of working from home, cybersecurity, medical companies, HR consultants, employment lawyers, and others providing products and services to facilitate our business and personal wellbeing are doing pretty good. They may not have even had to pivot their business model, but naturally, we must ask the question: what is their course of action when this is all over? Is their current or new business models sustainable in the "next new normal?"
Take a Breath - Don't Make Rash Decisions