May 19, 2020
Challenges in various forms are usual in the life of a company or a business. These challenges, depending on its extent, may be significant enough to lead to the downturn of such business and even, its eventual closure. According to the United States Small Business Association, only 25% of businesses last 15 years or longer. The percentage of failing businesses across the globe is bound to increase due to the emergence of the COVID-19 Pandemic and its consequent impact on the economies of the affected nations including Nigeria. Overcoming these challenges or succumbing to it, especially as it relates to fulfilling financial obligations, depends largely on the strategies and measures undertaken or adopted by business owners, executives and managers.
In this article, we examine some strategies and measures that businesses can adopt to manage challenges faced in the course of their operations.
Overview of financial challenges faced by businesses
It is common knowledge that amongst other factors, the survival of a business is connected to its ability to generate enough revenue to meet its working capital requirements and other associated costs. With the huge cost of running a business in Nigeria, achieving this is highly strenuous. The need to expend huge costs in generating power to run the business, providing security for assets and products, providing for essentials such as water and other office consumables, employing the right staff and paying their salaries, fulfilling regulatory requirements etc., takes a big chunk of the revenue generated or even the capital invested in such business. The current downturn in the economy of Nigeria due to the COVID-19 Pandemic has further put an additional layer of strain on businesses and their ability to generate revenue. The United Nations indicated that the slowdown in the global economy will cost the world around USD 1 trillion within this year (2020) alone. Even with the easing of the lock-down (that was earlier effected to curb the spread of the coronavirus), affected businesses may not be able to recuperate fast enough to sustain their operations. This gives rise to the need for such businesses to look internally on how they can manage their operations and resources better in order to survive this economic downturn and other financial challenges that they face.
Winning during challenging times
It is the ultimate goal of business owners to be able to make it through difficult times. Applying the right strategies in tackling financial challenges that is faced during these times enable businesses to sail through and survive. We discuss some of these strategies below:
Taking advantage of palliatives provided by the government and international organisations
Governments of countries all over the world provide palliatives and subsidies to their citizens, including corporations, to cushion the effect of an economic recession, epidemic, pandemic or other major disasters that is faced by such countries. In present times, palliatives such as tax waivers, reduced interest rates for loans, extended moratorium for loans etc., have been provided to individuals and corporations impacted by the Covid-19 Pandemic by the government of the affected countries.