The Coronavirus pandemic has led to a global lockdown and has affected businesses in every industry and of every size.
Therefore, now is a good time to have an in-depth look at your opportunities.
Large businesses are putting members of their workforce on unpaid leave, while small or medium enterprises are laying off employees. Countless forecasts predict the global economic outlook as being grim to downright catastrophic, which especially depends on how long the lockdown continues, how much longer before the number of people infected starts to decrease and how much time it takes to find a cure and a vaccine.
But let’s be honest – many of these economists and scholars have been wrong in the past. It is obvious that such a global event will affect businesses adversely and we are already feeling it, but it is too early to discount chances of a strong recovery which makes up for a few months of lost time & business, especially because it is not one country or economy which is affected by this, but the entire world. This also means that the entire world will strive to compensate for lost time once things get back to normal.
However, when things do go back to normal, it is but ‘common-sense’ that while the overall macro-economic situation would return to a modest recovery, at an individual business level, things will probably look quite different – some companies might get acquired by their competition, some might surpass their competitors while others might diversify into different lines of business and of course, some businesses simply might cease to exist. As for individual level – many employees will be left without a stable income and might be pushed to work in a field that is not their first preference.
In essence, this crisis like every other crisis in history presents challenges but also opportunities. To successfully seize the latent opportunities, the key lies in one activity alone and how effectively each business is able to execute it – PLANNING. And the time to do this planning is clearly now, before the lockdown ends, because this means you will be ready to launch in an all engines firing mode as soon as possible. So, let us not only manage to continue to survive this crisis but plan now to come out of it as a winner!
The focus during the rest of this of this article will remain on these topics:
- Why now is a good time to plan and start your new business
- How to structure your existing business to be able to most effectively deal with the current situation
We will also share some ideas on what businesses could look at doing before the lockdown ends to thrive later (not just survive). And we have also planned a webinar to delve deeper into some of these topics with an aim to come out of this situation stronger than ever (update: recording of the webinar is available here).
Why now is a good time to plan and start your new business
Besides the fact that there is a global economic challenge and that all of us should try & streamline our expenses to conserve our financial resources as much as possible, the following reasons make it clear why the time to digitalize and create a company that can be managed entirely online is now:
1. Most of us are in lock-down or quarantine and have time on our hands. So why not do everything we can to have a fail-safe plan and also become more cost-effective?
2. If you are an employee or worker who has been or might get laid off, the only way you can create value and save money & time simultaneously is if you have a company that you can run digitally. So lay a foundation for your business now and simultaneously plan what you might be able to diversify into.
3. Let us imagine if the lockdown ends in certain countries and it takes longer in others. The only way you can ensure that your work / business is not affected is if you have a ‘base of operations’ which can be managed digitally. If by any chance, you get stuck at home for too long, this kind of company could indeed be your saving grace!
4. You should also consider that your business will take some time to be fully operational. By the time the crisis is over, you have a business that is ready for emerging market and for clients. Also, you can do the initial investment when starting a company, but for up to a year, you can have zero maintenance costs, because in most cases the accounting can be done once per year for the annual report. It means the first maintenance costs will come after 11-12 months. You can focus on developing your business model and focus on core activities without having to worry about costs.
5. If you have an existing business, this plan will definitely help you reduce unnecessary monetary costs and provide you more time by making it possible to manage your business administration entirely online. Compared to your competitors, the advantage you can currently gain is to become more efficient and agile, so when the right opportunity presents itself, you can move quickly and cost-effectively while focusing solely on your core business.
How restructuring your existing business could help
The focus here is simple – restructuring your business should streamline your operations, make everything more efficient and ultimately lead to cost-savings in terms of both – money and time! It is the ideal moment for businesses, whether large or small (or freelancers, remote workers, etc.), to restructure themselves during this time of crisis.
This brings with it some value-added benefits:
1. Reduced costs of administration – Businesses in most countries incur a variety of expenses on registrations, accounting, VAT reporting, etc. which can indeed amount to some big numbers, especially as transaction volumes increase. For example, with Estonian e-Residency, annual administration costs (including incorporation, state fees, etc.) could be just about €1’000 for the entire year! Compared to most Western countries, this is 10X less if not more in certain cases.
2. Higher Flexibility – This means that of course, everything can be done online which provides all of us exactly what we need right now – time & location-independent administration – making our businesses more agile and flexible to easily adapt to sudden & volatile changes in the market. This also means that if as a business you decide to diversify into the import then the most efficient & probably the only possible way at present for you to do this would be to use a fully-digitalized business structure.
3. Better access to digital business banking tools – A number of companies like Wise (top cross-border payments digital banking provider), Payoneer (international digital banking solution & official payment partner of Amazon, Upwork, etc.) further augment the value of a fully-digitalized business structure. For example, a social media agency can easily get multiple local bank details with Payoneer in the U.S., Australia, U.K., etc. which means that customers can pay them as they would any domestic service provider, which is often easier for them to do than initiate international transactions which at times, for example in the U.S. might require a signed declaration to be physically submitted at the bank. This is of course quite inconvenient in general and presently, probably impossible to do with the lockdown in place. Another example – Wise could be used to pay employees (using only an App!) around the world at the lowest conversion rate possible, being especially much cheaper than traditional banks. This is especially relevant now as currency exchange rates become volatile. These solutions even offer bank cards for offline transactions and many other features, all accessible online, which traditional banks cannot even offer. Revenues are received and payments also happen faster and are instant in some cases (like Payoneer & Amazon) which also improves payment cycles & cash-flows for companies, especially considering the current global scenario.
4. Possible tax-savings – As these countries digitalized business management, they also simplified tax structures and other regulations to support the ease of doing business. As an example, in Estonia & Finland the corporate income tax is a flat 20%. However, interestingly Estonian companies do not pay any tax on re-invested profits or undistributed income, which in essence means, they only pay taxes on dividends. In the UK, the CIT (Corporate Income Tax) rate is even lower at a flat 19%. VAT is also more efficient, simplified and easier to manage. This makes these countries highly competitive and more attractive for businesses across the world – in the West and even compared to a lot of Asian countries.
The best part about these opportunities is that they are relevant & accessible to all business from all sectors, of all sizes from anywhere in the world. As a number of countries (like Estonia, Finland and the UK) have introduced possibilities to start & manage a company using digital tools via the internet, the cost of public administration required for business incorporation has simultaneously reduced. This benefit has further ‘trickled down’ to businesses & their owners themselves who obviously find it easier to do everything online, which costs them less in every sense – state fees, etc. are lower and the level of bureaucracy & paperwork is minimal which also means precious time is saved. Moreover, this has encouraged the entry of private sector partners who have created complementary digital solutions to optimize costs & offer high-functionality fully digital business solutions for accounting, general administration, banking, insurance & more.
If you want to learn more, ask questions and delve deeper, you are also welcome to join us for the webinar and learn from our experts & partners how can businesses survive the lockdown & thrive post-COVID-19?
The webinar is taking place on March 31 and the topic is: “Surviving COVID-19: Opportunities in digitalizing your business”