PANDEMIC ECONOMICS: UNDERSTAND, ASSESS, PLAN
As the COVID pandemic wears on and the impacts of social distancing and movement restrictions make themselves well and truly known, it is vital to understand the economic effects these forces are having on your business.
There are broader economic processes playing out all around the world, and for Australian businesses it is valuable to get to grips with what is happening in your backyard and what you can do to avert longer-term financial pressure.
In this blog, we take a look at the economic ripple effect besetting our national economy, how this is impacting the road transport sector, and some simple steps you can take to ensure you’re best placed to bounce back at the other end.
The COVID-19 pandemic, whilst primarily a health and well-being challenge, is also presenting some never-before-seen economic pressures that require a unique set of counter measures.
The ripple effect
Understanding this process in its simplest form, is to fathom the make-up of our national economy and its varying sectors—through the lens of a health pandemic.
With distancing measures in place for some time now, what can only be described as ‘contact-intensive’ industries are being hit the hardest, and in some cases are on the verge of collapse. Think aviation (with Virgin going into voluntary administration recently), travel, hospitality, events, and to a lesser extent perhaps, contact-heavy medical sectors such as physical therapy and the like.
On the flip side and while still affected, industries less dependent on close contact such as teaching, truck and machinery operation and professional service provision are seeing less of an impact.
Regardless, the entire economy is of course inter-related and inter-dependant and so we see a ripple or domino-like nature of the impacts once they take hold.
Understanding the global context
At an extremely high level, the OECD expects a sharp slowdown in world growth in early 2020. They have revised their projection for the year, down from an already low 3 per cent, to only 2.4 per cent – lower than in any year since the 2008 global financial crisis.
The reality is the whole world is facing challenges economically due to the unique nature of a human contact-based pandemic. There are disruptions to supply and demand, lower overall output, and as a result, the need for fiscal stimulus has emerged across the globe to minimise the negative economic impacts.
In your backyard
Knowing how to react within your business means recognising what is taking place in your sector or ‘your backyard’, as the saying goes.
Quite rightly, the federal government recognises that road freight is a critical link in the supply chain. And, as this blog goes to print, truckies are continuing to successfully move supplies from ports, from farms and factories—that means food, medicine, fuels and supplies—that are heavily relied on every day.
Interestingly, there are sectors within the road freight industry that are down and some that are booming as a result of this unique scenario.
Sectors such as government, essential services provision and supermarket logistics are least affected and in some cases are benefitting from these circumstances. The farming sector also finds itself in positive territory, with the drought broken in some key areas throughout the eastern states – and many farmers recently putting crops in the ground ahead of forecast rain.
What you can do right now
There are clearly a huge number of variables out of your control as a cog in a far greater machine, but there are some key moves you can make within your business to help cushion the economic impacts of this pandemic.
- Staff: Stay close to your staff. Keep communicating the good and the bad. Their level of support to you and your business right now is the highest its likely ever going to be, so keep them ‘in the tent’, motivated and ready to return to work when the time comes.
- Customers: Keep in constant contact. Ask yourself, ‘How can I help them stay afloat?’ and ‘What additional services can I provide to build loyalty and retain business?’
- Metrics: Track and watch key indicators within your operations. Understand what’s happing across each of the areas of your business every day. Data is king and will help you make informed decisions and assist in planning for the upswing.
- Marketing: As with any crisis management process, you must keep talking to your market. Do not go quiet. Let them know you’re open for business, providing solutions and ready to assist. Digital and online marketing and advertising are particularly potent even as distancing measures start to ease.
- Plan: Use this time to put some key actions in place to help position your business for a return to the new normal. When that time comes, you cannot afford to miss out. This may mean taking advantage of stimulus measures, creating staffing and procedural efficiencies or getting on top of cashflow.
The silver lining
There is light at the end of the tunnel. As Australia gets a good grip on flattening the curve and containing the spread of this virus, confidence is starting to build again.
Distancing measures will ease in the coming months if infection rates continue to drop at current levels, and as above, it is important that businesses are prepared for that and poised to respond.
The overall road to economic recovery is going to be long, but by being prepared to react now, your business will be in a place of strength when the time comes.
For insights and tips on how to insulate your business in a crisis such as COVID-19, check out our interview with Senior Business Advisor, Chris Downie.