Earning Money in the Crisis
by Barbara Huber
What effect does COVID-19 have on your business?
Currently no foundations are taking place. The great uncertainty as to how long the pandemic will last makes people in our country more cautious of full slump in sales.
From the customers' point of view: Planned foundations are postponed as far as possible. Persons remain in employment relationships that they no longer fulfil or continue to work for AMS in order to obtain financial security. Existing entrepreneurs, especially recently founded companies, are facing the threat of financial collapse. The business, which in the early days of every company, is not yet or only very slowly developing, has no chance to develop.
Ultimately, it will depend on the flexibility of the individual companies whether they come through the crisis well. I make my contribution by providing tailor-made and practice-oriented advice. I hope that my mission statement "increasing the survival rate of Austrian small businesses" will not suffer a bitter setback due to COVID-19 bankruptcies.
After an initial total collapse due to the cancellation of events, business is slowly recovering. Many educational institutions and congresses are choosing the path of digitalization and holding their events online. I am faced with the challenge of using new training tools, of designing my lessons differently and at the same time mastering the technology that will secure my existence.
From the customers' point of view
At the same time I recognize the challenge of my participants. Online courses can only be used effectively in education if those seeking education can also demonstrate the technical possibilities (laptop, Internet in sufficient data volume) on the one hand and the technical skills on the other (understanding of new tools). I see this problem especially in my distance learning courses. Only one third of the participants manage to switch from classroom courses to online courses.
Balance sheet accounting
At present, this business is not affected, but a slump is still to be expected, as my clientele does not generate any turnover and therefore requires no or only little document posting.
From the customers' point of view
The uncertainty of the future business development and the question of how long the measures will continue to be in place lead to great concerns. They are trying to contain these in exchange with me and to gain security through my expertise. I am happy to support where opportunities exist, but financial bottlenecks are a threatening uncertainty that can ultimately only be cushioned by the federal government and/or the Chamber of Commerce.
What challenges do your clients face?
My clients face two major challenges:
a) Financial bottlenecks
b) Transfer of the existing business model
The uncertainty of my clientele is great. Many entrepreneurs are currently (as of 23.3.2020) not able to apply for subsidies from the Chamber of Commerce or other funding agencies. They do not meet the requirements, as they are either not members of the Chamber or have not been on the market long enough. Although the Federal Government has promised measures within the framework of the Hardship Fund (however, the exact requirements for receiving payments have been unclear for a week now), it is still not clear whether these measures will be implemented. Many fear that this fund too will not be able to provide funds for them, and if it does – the funds provided will be far from sufficient to cover the financial bottlenecks.
The existing support in the form of a bridging loan is viewed very critically by entrepreneurs. I can only underline this view. In my opinion, this is only a postponement of the problem. If I have to take out a loan now in order to pay my financial obligations, I will have to repay the loan at a later date. At the moment, however, it is still unclear how long the suspensions will remain in place (i.e. what period of time I will have to bridge) and, depending on their length, whether I will even have the opportunity to make up for my missed sales.
Especially in the field of artists and trainers this remains to be doubted. If the measures continue into May (the deadline of 13.4. is again only a provisional one), full work can theoretically only be resumed in summer. However, the summer months are "dead meat" for these two sectors. The "dry spell" is therefore extended into the autumn. A fact that will not allow many companies to survive.
Transfer to a new business model
With this knowledge in the background, many companies try to change their business model. First changes are already visible:
Suppliers for gastronomy or large companies deliver to a new target group (= private persons)
Congresses and trainings are held online, although any live stream has been categorically rejected so far
Voucher sales are recognised as a new alternative. In the meantime, there are several online platforms that allow companies to register their products. The WKO has also developed a new certificate that distinguishes its members on the company A-Z as online traders or consultants
It remains to be seen how these changes will affect the time "afterwards". Will we see a return to old models or will new models be retained?
And another question arises in this change: Will all companies manage this transfer of the business model or will many fall by the wayside? Will the financially better-off companies hold their own or does "necessity make invention"?
About the Author
Barbara Huber has been self-employed since 2005. Her current business areas are start-up advice, business training courses and balance sheet accounting.