As COVID-19 now forces the world into a recession, there will be hundreds of millions across the globe who will face difficulty in some way, shape or form. This lockdown will bring new entrepreneurs and innovators to produce solutions on how businesses will run going forward. The world will now accelerate to the new online model faster than ever before.
Many talks about how we are entering into a recession period and some economists like Nouriel Roubini, who had predicted the last recession, even hints at a possible depression globally. Some exceptions would be India and China, with ~2% GDP growth in 2020, which is still way below -5 – 8% in the past several years. Whilst governments across the globe are constantly injecting funds into the fiscal stimulus, there is no clear path of how the funds will be recalled, repaid by increasing taxes or written off.
“Quantitative easing” or printing more money in simple terms is the treasuries’ way of getting more funds into the economy via government-supported instruments. But how can a government credibly commit to taking specific actions in the future? Until Distributed ledger technology (DLT), this question had no great answer, but now the governments can show their commitment through DLT. The world is undergoing a major reset through digital transformation.
This “reset” will now accelerate to a new generation of entrepreneurs, to address the following in a disruptive manner, thinking of remote working:
1. Technology – Industry Innovation and Infrastructure, AI and Robotization, Digital currency and the Blockchain, Extensive deployment of Distributed ledger technology, digital currency, and digital assets via tokenisation.
2. Information Explosion – Easy Research, Fake News, Privacy
3. Climate Action – Global Warming, Affordable & clean energy, life below and above water, responsible production and consumption
4. Political – Populism and Nationalism, The Demise of the Nation States
5. Society – World peace, Hunger, Population Growth, Religion, Reduced equality, Poverty Gap, Health and Wellness
Few lessons learnt in the past few weeks:
1. Majority of people can work from home.
2. The internet really is a saviour and mother of all technology inventions.
3. WhatsApp, Messenger, WeChat and various chat apps, with free communications, really work, but they can become addictive too. The way forward is free mobile communication.
4. Not every meeting needs to happen, nor every travel and business meeting needs to be in person. Skype, Zoom, etc. are all great ways to video meetings. Even events are now being run more via online delivery programs rather than the usual face to face conference rooms ways.
5. The kids and adults can survive without junk food.
6. We had been encroaching on nature way more than necessary.
7. We can build hospitals within days and also turn empty stadiums, events venues and even Trailers/RVs/Marques into mobile hospitals.
8. We can spend billions of dollars on the poor and care for people’s lives without the red tape.
9. We can survive vacations without trips to exotic locations in Europe, Asia, Africa and the USA.
10. Developed nations are as vulnerable as any poor nation, in fact, more vulnerable.
11. Our family system is still intact, albeit stressful testing times due to people’s tolerance levels. We have learned values and compassion.
12. We spend a hell lot of petrol unnecessarily burdening our economy and the climate.
13. Rich people are in fact less immune than the poor.
14. Elites are not powerful. They are shallow.
15. Husband and wife, or live-in partners, together make a home.
16. Elders are given more time and are respected as the backbone of a family.
17. Saving money is important, if not critical.
18. Most Funds and investments in the usual markets are actually subjected to Market Risks.
19. Living a hygienic life is not difficult.
20. Cooking is a primary survival need and most important skill, everyone should know.
21. There are a lot of good people in the World supporting those in need.
22. Charity is not something you give, it is a satisfaction you receive.
23. Working from home and gaining time from wasted travel, unnecessary meeting or office chit chat contribute to your balance in life.
So what is the impact on business during the slow down:
1. Bars, restaurants, clubs, events, travel, and spending on any luxury have come down drastically and will take long to recover.
2. Entrepreneurs and businesses are learning how to cope with creative and innovative ways, with new business models for the short and long term.
3. Remote working will become a norm, largely due to eco-based reasons, but also in most cases productivity and cost-efficiency.
4. Cash will be preserved and all major Capital expenditure will be almost cut to zero or be competitively researched online and contested.
5. Everyone has learned the importance of savings.
6. Cash is king, hence working capital and access to banking line of credit will be key to success or even survival. Investors and businesses operating too heavily leveraged will lose out due to margin and loan based call back from banks.
7. People getting more control and organising their homes, financial situations, plans for future, and lifestyle expenditure such as rent, infrastructure, entertainment, vacations will be minimised.
6. Everyone now appreciates more than ever before the front line staff of doctors, nurses, police, fire, ambulances, pharmacies, hospitals, and even non-medical professionals in delivery, distribution, supermarkets, farmers. These will become core businesses to invest in.
7. Physical and digital distribution of products and services, delivery and online sales is showing the biggest emerging market trend.
8. Many professionals will now learn to do consultancy, written, audio and video content online, from their home.
What will not change during the slow down:
1. People will learn better ways to source products and services, now looking for ways to save money. Anything from usual utility bills, mortgages, insurances, finance interest rates, savings account payback, investment fund return on investment, pension plans, etc. Online sites will become aggressive to provide better value for money and become more competitive, as they lose their heavy office costs and reduce headcount.
2. People have to eat, drink and consume to live on basics. Home delivery of such products and services will boom.
3. Traders, self-employed individuals, entrepreneurs, and trading businesses with healthy cash flow practices will thrive.
4. Distant e-learning, online coaching, mentoring, Yoga, meditation, spiritual being, holistic approaches to life and business will rise significantly, with transition to digital transformational ways online.
What you should do as an individual or business person:
1. Take control of your financial position, including all expenses. Look for better deals and consolidate your expenses.
2. Look openly and embrace change in your personal life, as well as business. Think hard about how to deliver the service from a remote working operation. Those who are career politicians, and employees who are scared of job loss, will always have excuses why not online.
3. Embrace automation and reskilling employees. Look hard at more productive, cost-effective ways to deliver the product and service. Better, look harder at the client’s problems and needs, as the client dynamics have changed a little in this reset. Target marketing is key.
4. Hold back any luxury and high-risk investments where the visibility of returns on the investment of costs is difficult to predict.
5. Make Google your best friend! Learn and develop yourself on improving new skills and competency to become more productive and efficient. There are so many planning and analysis tools available online for free, including mobile apps in most categories.
6. Share your entrepreneurial experiences as well as financial situation with close friends and family to educate them on how to plan and improve.
7. With every recession comes great opportunities. Invest wisely. Most billionaires are investing now to find the best deals. Learn and see what they invest in. Do not invest without research, research and research. Always look at the team behind the deal, not the product at first.
8. Look into how you can deploy distributed ledger technology, as well as digital currency into your business.
The current Corona Virus (COVID-19) has given the world a much needed “reboot/reset” time to respect various aspects of life and business. Hopefully, people will respect more the values of humanity and the sensitive balance of creating a united front from all angles, as the virus has no boundaries, colour, culture, religion, political angle or status.
The world will have some major challenges, disruptions, a shift in power and money. We will probably see mass closures of the backbone startups and small businesses, hence bricks and mortar businesses will have no choice but to explore and deploy new online ways of revenue generation, due to a huge amount of unemployment and housing market collapse. Major changes are happening as we speak, but it’s only up to us how to react and turn everything to our advantage.
Author: Mru Patel, Partner and COO of Flash Group, CEO of Sapian Capital