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THE EFFECT ON BUSINESS
Effects of the pandemic have rippled throughout the economy, but some sectors such as hospitality, travel and retail have been hit especially hard. Others have seen opportunities or shifts that are continuing to play out with some businesses experiencing a boost in demand, for example biotech, finance and digital technology.
Initially, many assumed the pandemic would be a short, sharp disruption. As it progressed globally and the impacts of business closures and social distancing requirements continued, it has become clear that we are only at the beginning of a sustained period of uncertainty. A World Economic Forum survey of global risk analysts forecasts the next 18-months will likely see a prolonged global recession, a surge in bankruptcies among businesses of all sizes, industry consolidations and some sectors will struggle to recover. The prospect of ongoing economic uncertainty and stop-start business conditions will make business planning deeply challenging.
A telecoms industry CFO explained that their organization had to rapidly respond to changing consumer behaviour patterns. The company saw home data traffic surge as people moved to working at home, while wireless data stagnated or dipped. As lockdown policies eased, and consumers moved outdoors once again, mobile data usage ramped up. To meet these swings in demand the company promptly pivoted their services and technology rollouts. The CFO’s challenge was to adapt to the new paradigm while continuing to invest in future plans that gave special consideration to mobile technologies.
The potential for ongoing spikes in Covid-19 infections, especially in the colder months, may trigger further rounds of restrictions. Companies could find themselves swinging back in response to significant shifts in behaviour and demand. Leaders will need to constantly iterate as we progress and regress through the stages of the pandemic.
The CFO of a digital training company reported that though they are “vulnerable to big swings in our customer base”, they had found themselves well positioned for the crisis. Since their platform reinforces training for front-line employees, the rapidly changing work environment presents an opportunity. This sense of opportunity, where it exists, is something business leaders are sometimes hesitant to speak about: there is discomfort profiting when many others are suffering. Others are focused on ways to support customers whose business has been disrupted by pandemic-response policies. A payment-processing CFO saw a huge drop in transaction volumes from their clients in retail, restaurants and entertainment. To support their customers who were shut down and without revenue they waived certain fees and offered support tools and resources to facilitate a recovery.
Meanwhile, the CFO of an organization that provides services to high-growth start-ups expected to see its clients facing challenges that would hit the real-estate part of its business. But while start-ups have shown a need for additional support in securing assistance during the crisis, they have also been unexpectedly resilient, and their real-estate challenge was smaller than expected.