COVID-19 - How is your Business Model ?

Your business model is important and as your accountant - RSA works closely with you to understand exactly what you want. In other words, does your business model make money for you?

Your business model must match your vision - attract people to what you have to offer, buy, make, build and so on.

What does this mean? Look at the impact e-commerce had on your business. Your customers no longer needed to buy your goods by viewing your display in a store, they could view a picture of it on your website. You also needed to change the way you processed orders to ensure your customer received the product. This meant an essential change to your business model, and the transition may have been easy or near impossible. Yet changes did not necessarily apply to everyone.  

Sometimes the changes to your business model may unfold over many years but they can also unexpectedly be thrust upon you. 'COVID-19'

This now may be time your review your business models to remain strong.

 

Here are some important questions to consider:

What will be the impact on your business to retain, attract and increase customers? 

Your understanding of your customer needs can shift over time. What if your customers prefer to deal with businesses online instead of face to face. You’ll need a different business model, could be modifying the way you display your products to an online presence.

Are your customers happy to continue paying for your product?  Will it cost more or less?

Customers may still buy your products but expect to pay less if it is now accessible online. What if your customers have been paying for your product when they visit your store.  But now there is a delivery charge. Some competitors may even deliver for free - a change to their business model. So its time to look at a change in your business model - your customers may not return to your store - they can have it delivered for free elsewhere.

Will you retain customers or lose them?

Your business may rely on repeat purchases. What if your products sold individually may attract a low margin, but when your customers visit your store, may purchase additional products on each visit. An increase in your margin!  But if bought online - they may shop once and then find the temptation to shop somewhere else appealing. It’s worth working hard to retain your customers as the costs of replacing them could be substantial  A change in you business model may be required.

Will you generate business opportunities in this new environment?

Your business needs to ‘stand out’ from the competition in order to attract new customers. The landscape is constantly changing! Will this impact you attracting new customers. What if your industry has new legislation applied, there may be new competitors, or existing businesses who adapt quickly and effectively in your market. Unless you do something to change your business model, your share of the market could diminish.  OR, a recession can shake things up and provide you with an opportunity to attract new customers.

Will you seize these opportunities?

Creating business opportunities is one thing, but converting them into sales is another. What if a recession reduces spending and  on leisure travel and if you cater to tourists, you will be affected. You can ride out the downturn or change the business model. One owner of a bowling alley got tired of unpredictable, seasonal tourist demand so converted his facility into an event space for local corporations, a fundamental shift in the business model.

 

What about the future? What will the cost be? Can you still provide your service?   

In order to provide your product or service to your existing and future customers, investment is important.  What in? People and materials!  What if you rely on certain materials in order to produce your product. Then - your supplier stops selling to you. Unless you secure an alternative supplier, you may not be able to offer your product at a competitive price and a change to your business model will be required.

 

As we emerge from COVID 19, RSA can help you with these questions. Business models can be highly resilient and your decision to change your business model is an important one.

Contact us to work with you to analyse your current business model and work towards getting it right.  The rewards will be a sustainable business!