Back in 2008, just prior to the Great Recession, I was managing a thriving ecommerce
company selling jewelry supplies to crafters, artisans, and professional artisans.
More than 30 percent of our revenue came from selling sterling silver in a really considerable margin. The effect of the wonderful Recession on our clients along with the sky-high price of silver compelled us to retool our product catalog around low-cost, low-margin products.
The effect of the excellent Recession… forced us to retool our product catalog…
Thirty percent of our earnings disappeared in a matter of months. We added new product lines, reduced staff, and saved money to prepare for the recession that was just beginning. All that coincided with a change in fashion styles, from the type of jewelry that a whole lot of our customers produced. Though our earnings recovered by adding new products and customers, we never attained the pre-2008 profit margins. We sold the business in 2012.
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Fast forward to March 2020. We are living in a world I didn’t expect in my whole life as we tackle the spread of Covid-19. It isn’t too early to take into account the impacts of the crisis in your organization. Many of your customers, suppliers, and employees will most likely be dramatically impacted. You may need to pivot your company during the next three to six months, like my scenario in 2008.
Carefully reflect about the short- and long term impact of the crisis.
- Clients. Many will be forced to reduce spending or buy lower-cost products. Can your product catalog meet those needs? In the event you reduce prices or inventory different types and quantities of merchandise?
- Products and suppliers. With all these products sourced in China and other nations, will your supply chain remain valid? Products may be postponed in transit or simply inaccessible. Your suppliers may be forced to discontinue products or increase prices. Consider diversifying your providers . Evaluate new products that better serve the new reality to your customers.
- Employees. The market will change forever in a number of ways. Your employees will most likely change, also, with a new focus on office and health sanitation. Flexible work schedules could be crucial. The temporary, driven working at home may become irreversible (and desired ). Outsourcing fulfillment could become compulsory if staffing becomes too tricky.
- Balance sheet. Have a close look at cash flow if you experience a downturn in sales. Many ecommerce companies are reporting an increase in earnings as bodily stores close and clients stockpile goods. But that increase will most likely be temporary. To conserve (or create ) cash, considering refinancing loans or taking out new ones. You may want the money to fund new products or to prevent layoffs. Delay capital investments if possible. Bottom line: conserve cash.
- Your brand. You are likely receiving emails from vendors, customers, and business colleagues that address how the crisis affects their relationship with you. Consider doing something similar. Reflect also on ways to help your clients in this important moment. Prevent damaging your brand by appearing not to care or by gouging customers.
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