The pandemic and its economic effects were entirely unexpected. When businesses closed at the height of lockdowns, a lot of entrepreneurs were taken aback. Businesses, big or small, experienced massive losses, which led to complete closure to some.
The pandemic has caused unforeseen circumstances. Because of this, businesses were unable to prepare themselves. This remains a major lesson for entrepreneurs to become more prepared and invest in risk management. This is why businesses should plan by taking the necessary steps to spot potential problems as soon as they arise.
Scenario Analysis
A lot of things can happen as the pandemic continues to exist around the globe. While this takes place, businesses should consider a wide range of circumstances that could happen to them.
For example, social distancing mandates have taken a huge toll on the food industry. As vaccines have been rolled out, restrictions have been adjusted. This led to customers coming back to dine in their favorite restaurants.
Consider a scenario where a new variant begins to spread. This stops customers from dining in again. This creates a ripple effect on the industry. The demand for kitchen supplies such as modern kitchen knives will decrease. Prices of meat, fruits, vegetables, and spices will potentially rise.
During scenario analysis, consider financial, economic, and sociopolitical factors. This means that businesses should look into external and internal factors.
Supply Network Mapping
As a form of risk management, businesses need to be consistent with supply network mapping. Because the pandemic globally affects businesses, it’s important to know where suppliers are getting their supplies. This entire web of suppliers gives businesses an idea of which factor in the supply chain is prone to issues.
However, companies try to avoid this process, as it tends to be expensive and rigorous. Instead, they take accounts from individuals from their suppliers to recount relationships and information. Compared to a map, human anecdotes are less trustworthy since they could only be secondhand information. Some information can be lost in translation or subject to faults in human recollection.
A supply map can aid scenario analysis. Following the food industry example, suppliers, especially those from other countries, will be experiencing outbreaks of different degrees. Social movements could also interrupt industries from performing well.
Despite the cost of supply network mapping, a supply map will prove useful in mitigating massive losses and risks. Through this, businesses will identify problem areas before unwanted situations emerge or get out of hand.
Increase Business Agility
Every business, to survive, must be adaptive to changes. They should keep up with the market despite any fluctuation.
This involves a good plan backed with trustworthy data. A plan does not have to be fool-proof right from the start, but it has to evolve. Entrepreneurs can adjust their plans as they learn from past mistakes and become aware of trends.
A lot of factors come into play when it comes to business agility. The following are some examples:
- Market volatility. In general, this is a primary factor for the importance of business agility. The unpredictability and constant changes of the market make adaptability essential.
- Human factor. A huge part of the market, or the business world as a whole, is driven by humans. As the cliche goes, humans aren’t perfect. This affects the market as well.
- Unforeseen circumstances. Economic depression, natural calamities, pandemics–these are occurrences that nobody knows when they will truly happen.
To become more agile, entrepreneurs shouldn’t be afraid to take steps that may seem drastic. These drastic changes could lead to success, especially if this pivot is backed by proper analyses and planning.
Digitize
Digitizing is not only beneficial for social media, advertising, and marketing purposes. Because the uses of technology are expanding, it can take over minute tasks.
Replacing repetitive and little tasks with technology saves resources and manpower. Businesses can assign employees to tasks that matter more and can glean more returns.
Digitizing also allows businesses to keep track of ever-changing trends. They can use powerful computers to perform processes with ease and efficiency. This takes human error out of the equation.
Moreover, technology makes collaboration easier. Communication with suppliers, partners, and the community is crucial. More people helping each other is a lot better than being alone. This also makes staying updated on market changes faster and more convenient.
The Takeaway
Unforeseen circumstances, market volatility, and other unwanted incidents can affect businesses. Before these could happen, businesses should devise a plan to manage the risks. Through proper analysis, data, digitization, and agility, businesses can be more prepared to face challenges.