It is our mission to help to build more valuable companies. That means also – and especially – being on hand in times of crisis to help companies emerge stronger and with renewed value afterwards.
The current situation is having a dramatic impact on businesses. However, we’ve already learned a couple of things from our customers in Germany, The Netherlands and Italy: not all companies cease to operate in a crisis, and some actually perform better than before! After all, this crisis will pass too, eventually. So what can you do to cope in the meantime? And how can you increase your company’s chance of survival?
Over the coming weeks, we will be gathering information about how our customers are dealing with the huge changes in supply and demand. We will share our findings with you, and provide advice and support where necessary.
Here’s what our customers are experiencing so far:
Within large (publicly listed) companies:
- they are frantically analysing their Q1 results and providing investors with a forecast for the rest of 2020
- they are trying to coordinate people working from home, especially for projects with fixed deadlines
- this crisis as being seen as a real-life experiment in remote working for the masses
- contracts with freelancers have been temporarily put on hold in anticipation of a drop in revenue
- overhead costs are being critically reviewed
- deferrable investments are being put on hold, although strategic investments are continuing
- they are in some cases actively stimulating their employees to continue ‘consuming’ and to shoulder their responsibility for keeping the economy going
- their hotels are being converted into hospitals
- if they have a strong balance sheet and/or subscription-based revenue model, they are remaining calm and expect to be able to weather the storm
- they are already spotting acquisition opportunities in some cases.
Within small and medium-sized businesses:
- the situation varies enormously across the board. The gap is widening between the digital economy and the traditional sectors:
- digital players are capitalizing on the huge acceleration in their market growth
- some of the more traditional players are also noticing some surprising effects, such as cleaning companies that are suddenly having to scale up, doubling or sometimes even tripling the frequency of their rounds
- 78,000 companies have already requested short-time working in the Netherlands alone
- financial departments and advisors to SMEs have gone into overdrive
- the focus is now on working capital, with tighter controls on managing receivables, getting (partial) payment for orders in advance and searching for working capital loans for 6 to 12 months.
Looking ahead, even now
At Connect Capital, we definitely agree that it makes sense to increase the focus on costs, but at the same time it is also important to think ahead. This crisis period offers opportunities too – from luxury perfume houses that have started to produce antibacterial hand gel, to cleaning companies that have been promoted from a basic facility to a business-critical service… not to mention e-learning platforms, digital workplace applications, digital payments and home-delivery platforms. Now is the time to seize those opportunities with both hands.
In tomorrow’s update, we will explain what else you can do – apart from just reducing costs – in this unprecedented period.