Change your business model? 10 Practical Tips for SMEs in the Corona Crisis

SMEs make up the overwhelming majority of companies and account for two-thirds of jobs in Switzerland. According to SECO, one in five Swiss SMEs had to apply for a COVID19 loan in the wake of the current pandemic. The Credit Suisse SME study surveyed 1001 Swiss SMEs between September and October 2020. More than half of the SMEs were still below pre-crisis levels or even in acute crisis management in the fall of 2020. For this reason, almost half of the SMEs adjusted their business model. Among companies that were in acute crisis management in fall 2020, the figure was as high as four out of five.

But how can you successfully change a business model in such a short time?

1. motivate, support and train employees

First things first: Without employees, nothing works, ever. They are just as challenged in the crisis as the management. Video calls every morning with the team for a short informal exchange help to give everyone a daily structure. This way, everyone knows that they have to be dressed in front of the PC in the morning. Providing adequate infrastructure for home in the form of laptops, monitors, keyboards, mice and smartphones, as well as a new expense allowance for cell phone and Internet charges, ensures that everyone has what they need for their work every day.

Training employees on how to use the video conferencing tools, as well as introducing simple project management tools such as Asana or Trello (free and very intuitive for up to 14 people), help leaders manage the team remotely.

Small tokens of appreciation, such as a surprise package or free online sports classes for employees, also sent an important signal of appreciation.

2. examine finances with a fresh eye

With the constantly changing conditions, deadlines, credit options and safety concepts, all companies are extraordinarily challenged. Through the association or with the help of external experts, it can be quickly clarified what support one is entitled to and how one must proceed. A fresh look at the cost structure can also help to make good decisions and to see where there is (still) potential for savings that do not affect the quality of the core business.

What can be leased, terminated (premises, leases), postponed or interrupted, and quickly reactivated when full operations resume?

3. adapt supply chains and exploit new synergies

Long and complex supply chains have caused problems for many companies due to closed borders and production stoppages. As a result, many SMEs switched to local suppliers during the first lockdown. The expansion of the supplier network offers the possibility of being able to operate faster in the future - since it is geographically closer - and to build up new synergies thanks to the connecting location. The combined know-how of both parties can thus create products that meet new customer needs.

4. direct access to new customer groups thanks to social media

Social media channels have grown strongly in and through the crisis. Above all YouTube, Instagram, Pinterest and TikTok. As people have increasingly searched for information and products, search engine advertising such as Google Ads has also benefited greatly from the crisis. General online time has increased, fueling digital advertising opportunities.

All of these platforms offer companies the opportunity to communicate with (potential) customers in real time, to offer services and products directly via them, and to reach (potential) customers in a targeted manner even with very low budgets.

A new, revised social media strategy opens the doors to new business. If the knowledge is not yet available in the company, it is worth inviting an expert for a digital workshop. This way, a new strategy can be rolled out within a matter of weeks.

5. setting up and expanding online stores and delivery services.

Many stores are no longer allowed to serve customers in their retail outlets. Accordingly, they already had to quickly convert to their own web store or delivery service last March. Many simple website tools like Jimdo or Wix offer intuitive online store solutions with license fees of a few hundred francs, which can be set up by oneself within a few days. This also covers the payment options, so all you have to do is enter the bank details. The system takes care of everything else.

6. optimize online presences

In order to sell goods via your own store, you first need enough visitors to your own website. In order to optimize these figures, appropriate SEO (search engine optimization) measures should be taken by, among other things, revising website texts and optimizing loading times. Additional Google Text Ads, text ads on the Google page, for a better ranking in relevant search queries do their further. For the start the money is well invested, if here a professional with one to two days work sets up the most important and optimizes thereafter in regular intervals. Depending on the topic, most companies are already there with a few hundred francs advertising budget per month.

7. partnerships with large portals for more visibility on the market

If the brand or company is still too unknown to already account for a critical amount of website visitors, a partnership with a well-known portal such as Amazon, Galaxus, Brack or Eat.ch can be the more efficient way. In this case, a percentage of the sales price (attention up to 30%) always goes to the portal. This must be taken into account when pricing. Of course, you can also run the strategies in parallel and gain new customers through the portal, who would not have come to your website on their own. With a well-implemented customer loyalty strategy, you can ensure that they will book directly via your own site next time.

8. clever use of messenger apps and (video) chat in customer advisory services

Since branch visits are currently not possible and will remain uncertain in the coming months, other ways are needed to provide customers with precise advice and support. Instead of cumbersome contact forms, a live chat or even Whatsapp can be integrated on the website with simple means. Employees can guide customers through the processes via video chat. To get started, you can work with free tools like Google Hangouts or go straight to the current market leader Zoom. Here, too, employees can be trained within a day and thus ensure professional customer care.

9. create valuable alternatives to events & networking

Large events such as conferences and trade fairs will have to wait even longer. Based on this assessment, one should start looking for alternatives. One thing is certain: no relationship management at all and no exchange of knowledge with (potential) customers or partners will result in additional sales losses in the long run. Exciting online master classes with industry experts offering short interactive sessions for existing or new customers are a viable alternative here. More exclusive events on a small scale for the most important partners in the summer and with an appropriate security concept can provide a remedy.

10. provide security

If the above measures are effective, it does not mean that customers will buy. After all, crises generally lead to an increased need for security. It is therefore important to consider not only how to sell something to customers, but also how to give them a sense of security, either with the product or the service itself or with the decision. This can take the form of seals of approval, proven security concepts, money-back guarantees or trial subscriptions.

The time of fool's freedom - let's use it!

In every crisis, the cards are reshuffled at different levels. This is exhausting, mostly unfair and there will always be winners and losers. All companies with sufficient resources will have to examine the current upheavals at the strategic level, identify opportunities and set priorities.

1. What is the actual core competence and where and how is it needed in the new reality?
2. What new business models are emerging thanks to changing consumer behavior (for example, focus on online store with show room or subscription service for home delivery), what new locations are needed and in what size (sales area, offices, etc.), and what new (digital) processes will bring further progress and new synergies?

It is the perfect time to tackle new ideas, as people have become accustomed for the moment to the fact that not everything is working smoothly yet. There is a time of "fool's license" because everything is new. Processes are not yet running smoothly, delays are occurring in unexpected places, and dealing with uncertainty could become its own Olympic discipline. Those who get started now can still make all the mistakes and score points with optimized processes, fast results and flexible models until the world falls back into its (new) structures.

"The clever use of entrepreneurial opportunities, scarce resources and the design of innovative customer solutions in the face of great uncertainty with as much creativity as possible", which sounds like a fitting summary of the last ten months, is the scientific definition of Entrepreneurial Marketing.

Author:
Tanja Herrmann is head of the study program CAS Business Creation & Marketing Strategy at the HWZ Hochschule für Wirtschaft Zürich.