This too shall pass

It was March 2020. The world suddenly realised that it had been turned inside out. Covid-19 was everywhere, shutting down governments, businesses, lives and countries. Economies slumped, companies floundered, and business continuity and crisis management plans kicked into gear. As far as they could, anyway; few companies could have predicted what this pandemic brought, even fewer were prepared. According to Gartner, 55% of tech CEOs weren’t even ready for an economic downturn, much less the comprehensive and sweeping impact of a pandemic. Today, the pandemic is showing little sign of reducing its impact on economy and company. The channel is facing an entirely new future. It doesn’t matter how well it prepared or how badly it fared or what lies ahead, what matters is that it makes a plan.

“Uncertainty is the biggest challenge facing the channel,” says Sandra Beswick, director of Fluence Capital. “The constant message is that our lives will not be the same as they were before the pandemic – change is inevitable.”

The main challenges facing businesses include: a deepening recession; concerns around liquidity and solvency; demands for payments and legal action may start as the country eases the lockdown; and planning for survival while navigating the unknown, which is particularly daunting. This is further complicated by the need to hold onto talented employees while re-evaluating budgets and costs. There’s little point regretting plans not made and diversification not done pre-pandemic, it’s time to get on with plugging the holes and getting the ship back to shore.

“Maintain customer contact – this is critical,” says Brett Watermeyer, head of sales: business partners, at Vox. “Look at how you can realign your strategic objectives to incorporate both a consumer- and business-focused sales strategy. One of the key value propositions when considering a channel partner versus a large corporate sales representative is the partner’s ability to maintain high levels of personal contact with their clients. This can often be the differentiator between winning an opportunity, or not.” An agile and adaptable approach to the customer, the market and the business strategy is a very good reason why a company will succeed in the current environment. Take the time to assess what the market actually wants, and structure solutions and investments that match. If your company offers a nice-to-have, change it. Adapt, and make it a need-to-have. This is not the right time to dive for a quick buck at the expense of the customer because they will remember, and they won’t remain loyal.

“Every member of the channel needs to ensure that they’re providing the right types of products and services considering the fundamental way that business has shifted,” says Colin Thornton, CEO of Turrito Networks. “Some needs or focus areas have moved to backburners and there’s no point trying to convince customers otherwise. Many companies are focusing on the basics and have taken ultra-conservative views on budgets and spend.”

In this tough environment, customer loyalty and relevant product offerings are a must. But so is sharp financial acumen and a long, hard look at the bottom line. According to Sean Segar, co-head of Nedgroup Investments Cash Solutions, this is not the time to chase yield, and to ensure that any risks the business is taking are worth any extra yield.

“In the falling interest rate environment, it will become increasingly difficult to keep yields up, but relative to the call rate, market funds are still very attractive,” he says. “It’s also important to avoid poor credit and to watch liquidity. This has not been a problem during the Covid-19 period thanks to responsible handling of the money markets by the South African Reserve Bank, but this could change at any time.”

Cash flow is the lifeblood of the business. Liquidity has to be prioritised. This means that like markets, cash flow has to be assessed regularly. This will ensure that the organisation is prepared for a drop in revenue, is ready for any potential obstacles, and can handle an unexpected swerve in economic direction.

“Under the current circumstances, it can be especially challenging to follow up with clients and customers for money when many of them are in a similar position,” says Beswick. “Maintain clear and regular communication with debtors and customers. If your customers are facing cash flow issues, negotiate and suggest a payment plan.”

Knowing the financial truth about the business is also important. If you can see where finances are failing and the gaps in the foundations, then you are better placed to make decisions around changing your business model, or downscaling, or working with a professional to explore alternative options. This is also where you need to uncover any areas of debt and be careful when considering going into more debt. This can make any financial situation markedly worse and can put immense pressure on the business and its future.

“Scenario-planning can really help the business alleviate some of the uncertainty as you can assess the potential impacts of certain outcomes, as well as envision possibilities on the other side of the crisis,” says Beswick. “There are three possible scenarios that enable business leaders to explore a range of potential futures – worst case scenario, middle of the road (the most likely), and the best of a bad situation.”

The recovery of any business from any one of these scenarios will depend on a variety of micro and macro factors, but it’s important to try to predict which way it could go in the crisis. This will help to define how you can layer your planning and investments to ensure that the business is stable throughout – or as stable as it can be – immersed, as it is, in uncertainty.

When asked what one piece of advice they took to help them navigate the pandemic, it was interesting to see that most people replied with four simple words: This too shall pass. This is the motto that Nedgroup’s Segar says made all the difference to his organisation’s approach to the pandemic, and that Vox’s Watermeyer uses to define how the company looks at the future.

“The situation we find ourselves in currently is not permanent,” he says. “It has changed the way we engage and operate in our business lives, and will likely become normal as time goes on. Our industry and markets were never static and this puts us, and the channel, in the fortunate position of being able to adapt and adjust to sudden shifts in the status quo.”

The future was never certain to begin with. Yes, this is a far cry from an unexpected economic jolt and a sharp V return to normal or a shiver in the boots of market trends or customer demands, but it is still something that the channel can handle. Transparency, authenticity, financial acumen, considered investment, and relationship-building are the blocks that will build the right foundations for the channel in this crisis. It’s about creating a stable base that’s not set in cement, but rather one that – to continue with the maritime analogy – is capable of riding the waves. Not only will this agility be of value in the future when it comes to diversification and adaptability, it will help when the next tsunami hits. Of that, the channel can be certain.