Published05. Aug. 2020
The Impact Of COVID-19 On Businesses: 5 Months On
Following months of business disruptions, companies have taken necessary steps and measures to battle the effects of COVID-19. In this article, Management Events follows up on the strategies, investments and forecasts of top organizations in Europe for the coming months.
It has been approximately 5 months since COVID-19 was declared as a pandemic by the World Health Organization (WHO) on 11th March, 2020, and since countries established lockdowns in early March, following China’s quarantine measures.
At the time, Management Events ran a survey to find the COVID-19 impacts that businesses were facing and anticipating, and the strategies they were forming to ensure business continuity.
In this follow-up report, we uncover new insights on how top companies in Europe managed business disruptions from the coronavirus, and what they are planning for the year ahead.
ALMOST HALF HAVE RECOVERED
Our previous Executive Trend Survey found that 64% of executives anticipated the coronavirus to have short-term negative business impact with the majority expecting ‘business as usual’ in 2 – 3 months.
In our latest survey with over 1,000 decision makers across Europe, out of the organizations that were negatively impacted by the pandemic, 31% said that they are currently in the recovery stage while 12% are already headway into the growth stage.
As it has been almost half a year since the coronavirus impacted businesses and operations worldwide, it’s expected that affected firms have implemented steps and processes to ensure the recovery and continuity of their business.
However, post-COVID-19 business growth is another matter. With anticipation of a volatile demand environment and unpredictable market behavior, organizations are identifying new growth areas and re-thinking their corporate strategies to be more resilient and competitive for the coming future.
In fact, according to our survey, 43% of respondents are anticipating a growth in business within 3 and 12 months.
Among the industries surveyed, the majority of respondents that anticipate slow revenue are from the banking, insurance and financial services industries.
REVENUES CONTINUE TO BE AFFECTED
Based on our previous survey, results showed that 86% expected significant revenue drop due to direct impact of the outbreak, whereby 33% predicted a fall of more than 15% while another 33% forecast a 10% decrease or less.
Even 5 months down the road, businesses are still anticipating negative revenue effects of COVID-19, showing the long-lasting financial impacts of the coronavirus.
44% of respondents are forecasting a drop in revenue in the coming 6 months. Meanwhile, the rest are expecting a revenue increase, but with the majority (40%) forecasting only a rise of less than 15%.
Nevertheless, business leaders are optimistic about their future financial flow, with 52% predicting a revenue increase of at least 15% within the coming 12 months and 18% foreseeing a boost of 15 – 30%.
The healthcare services sector is among the topmost industries that are predicting a drop in revenue, followed by banking, insurance and financial services, logistics and transportation, and industrial products and equipment.
BUDGET REVISION FOR BUSINESS CONTINUITY
Revisions of budget and business strategy are the top focus areas for organizations in ensuring the smooth continuity of their operations.
59% of business leaders in Europe are reworking their budget plans and predictions in light of the pandemic effects, followed by a revision of business strategies and goals (50%). Meanwhile, cash flow preservation is a key focal point for 42% of businesses facing negative disruptions from COVID-19.
However, a majority of companies that are rethinking their goals and budget for 2021 are only implementing slight changes to their goals albeit with a lower budget.
On another note, organizations are also reviewing their client-communication and sales channels, with 47% expanding their digital customer service channels and 37% increasing the adoption of digital sales channels.
REMOTE WORK TO CONTINUE
As expected, video conferencing and online chat platforms (86%) are top technology investments as organizations continue with remote working. However, a number of respondents commented that their firms were already well-equipped with digital and remote work technology even before the pandemic.
Trailing behind online communication channels is the use of cloud technology, which is a key investment for 47% of executives in helping the effectiveness of remote collaboration and productivity. This is followed by cybersecurity software (29%) and project management and collaboration tools (25%).
Throughout the past months, it’s evident that “enterprises leading in digital transformation are significantly less vulnerable to the epidemic”. But the number of organizations that were ahead in digitalization efforts and IT initiatives are in the lower percentage.
Only 15% of our survey respondents disagreed that the outbreak forced them to accelerate their digital transformation, compared to 64% of executives who agreed to the statement.
DATA REIGNS OVER CYBERSECURITY
Pre-COVID-19, cybersecurity was named as the topmost tech adoption for organizations’ business strategy in our survey.
Today, while cybersecurity is still a key investment for 49% of surveyed executives, data science and analytics hold the highest priority for 61% of business leaders.
Furthering emphasizing the importance of data, 79% of the respondents agreed that they are looking to update their existing data analytics models to accommodate changing market behavior.
This finding is in line with Forbes’ article on analytics spending, whereby “49% of enterprises are either launching new analytics and BI projects or moving forward without delay on already planned projects.”
BULLISH IN BOUNCING BACK
Perseverance, determination and innovation are driving factors for organizations navigating the business implications of the pandemic. And our findings have shown that businesses are bullish in their ability to bounce back to ‘normal’.
As seen from our previous survey, 88% of business leaders expect to have their businesses back to operational levels within 6 months.
The finding corroborates with our recent survey, by which more than 75% of surveyed executives have a positive business outlook for 2021. 39% are predicting stability for the coming year while 38% are expecting business growth.
MOVING FORWARD POST-COVID-19
For certain industries, the past few months were a bleak time for their businesses, and for some, the impact might be longer-lasting than others.
But as stated by a respondent, there are positive effects from the coronavirus crisis, such as the acceleration of digital transformation and IT initiatives.
COVID-19 clearly showed that businesses cannot afford to be complacent, and to constantly reevaluate their processes and strategies – not just for the resilience and sustainability of the company, but for the good of their workforce and customers as well.
While it’s yet uncertain how long the business landscape will feel the aftermath of the outbreak, it’s undeniable that organizations are leveraging innovations to weather through the crisis and prepare for the future.