New Normal, New Businesses
Companies must face the new normal with innovation. There will be no place for the old ways of doing business.
INNOVATION is the only way forward. The Covid-19 pandemic has drastically changed the business world. From markets, business processes and sources of funds to consumers, workers, workplaces and the way of working, nothing will be the same as it was before the pandemic came. The only options are to change or die. Change could even end with abandoning the old and entering a new business sector.
Businesses throughout the world are now preparing to face a new way of doing things after the Covid-19 pandemic. Unfortunately, this new world must be faced with capital that is depleted, or even negative. Almost every business sector has been hammered: non-health manufacturing industry, tourism, hotels, transportation and also media. The banking and financial industries were eventually dragged down by the collapse in the business world.
In Indonesia, thousands of companies have gone bankrupt, while others are surviving with declining capital reserves, and only a small number are surviving and managing to make a profit. Government support in the form of tax breaks or delayed payments have only given business is a breathing space and they must still face the real problem: reduced income and almost no opportunity to make a profit.
It will not be easy for entrepreneurs to enter the new normal, which will begin at the start of this week. This new normal for business is clearly different from that being faced by the public. It does not only mean social distancing, wearing masks and adopting a clean and healthy lifestyle. They will also face a market that has changed. Consumers’ shopping habits will also have transformed. Items for which there used to be no budget, such as vitamins and health equipment, must now be purchased.
At the same time, the incomes of the majority of people are bound to have fallen drastically as a result of job losses and company bankruptcies. The national development planning ministry estimates that the number of unemployed will increase by 4.2 million people and the number of people living in poverty will increase by 2 million compared to the September 2019 figures. Given the situation on the ground, this data does not seem too optimistic.
It is these gloomy market conditions that companies will have to face in the new normal era. It is possible that industries supplying primary needs will survive, but those involved in secondary and tertiary needs are bound to suffer because people will reduce their spending. For example, in April, only 24,276 cars were sold, a fall of 60 percent from the 60,447 that were sold in March. This is not likely to change before the end of the year.
The challenge for entrepreneurs now is facing many problems at the same time that must be solved quickly. These challenges vary from one business sector to another. For example, because of social distancing, the transportation sector will have to reduce occupancy, which will in turn lead to a decline in income. Hotels are likely to lose large-scale events. Other business sectors will have their own problems.
The suggestion from many management consultants that digitalization, including the use of the Internet, needs to be accelerated might be appropriate for some businesses such as banking, telecommunications and media. They have probably learned from the digital disruption that occurred almost a decade ago. With reduced income and capital, the choice has become either not easy or not cheap, especially for small and medium sized enterprises.
Eventually, everything will come down to the ability of managers to respond to the Covid-19 pandemic, including ensuring capital security and cash flow, moving towards more efficient production processes and responding to market changes. The old ways of business must be forgotten. Conversely, precise and rapid innovation in all elements of business will be the two vital keys for entrepreneurs to survive the Covid-19 pandemic and the post-pandemic period.