The stories of some businesses releasing their lost revenue reports for the first quarter of 2020 have been pointing at the huge efforts it would take to stabilize post-COVID-19. The economic slump due to COVID-19 has adversely impacted businesses that were once considered cash cows in their respective markets.
In the first quarter, Uber alone has suffered a net loss of $3.9 billion as the lockdowns that were imposed led to the temporary closure of their ride-sharing app business. However, the silver lining to their cloud is the other subsidiaries that they have been nurturing for years — Uber Eats and Uber Freight.
The impact of COVID-19 on the on-demand business is such that its rides business only witnessed a 2% change compared to last year’s first-quarter revenue results. On the other hand, Eats and Freights witnessed a revenue percentage change of about 53% and 57% respectively.
Uber’s primary competitor, Lyft, has hit a rough patch, too, with a net loss of $398.1 million in the first quarter.
The declining numbers are affecting the on-demand businesses and its community adversely, especially since startups all over the world have considered Uber as a real frontrunner.
Even the goliaths of the market can feel the pinch owing to the crisis. But, what you do to bring your business back on track, decides its fate in the long run.
Post-COVID-19 World: Three Lessons for Businesses
Here is how you can stabilize your business post-COVID-19 world by taking a little from column A, a little from column B.
Lesson 1: Be prepared with Revised Business Continuity Plans
Consumer sentiments have led to a tectonic shift, which, in turn, is affecting businesses adversely. For enterprises, what seemed promising and profitable yesterday, makes less sense today.
Coming back to Uber, their ride-sharing business concurred $742 in EBTDA (earnings before interests, taxes, depreciation, and amortization) in the last quarter of 2019 — exceeding that of Eats and Freights. The tables have turned though, as their rides business went down by 80% globally in April 2020. But, Uber came up with a business continuity plan and launched two new services; Uber Direct and Uber Connect for streamlining Freights and Eats operations.
Thus, a business should not be refraining from resiliency planning. Situations such as the pandemic teach us the importance of planning for now and stop obsessing about yesterday’s wins.
The questions should be focussed around — What can you do to continue operations? How to shift priorities towards business opportunities that show a surge in demand? Are there alternate business models that can fit your business niche to maintain cash flows, now and in the future? And, what is your planning towards adjusting to the new normal?
- Safeguarding your business and workforce by facilitating remote work. Guidelines should be laid down, video communication toolkit should be in place, and teams should be motivated to perform in their new work setup.
- Having a robust business continuity strategy should get precedence that covers the worst-case scenarios for a business and the corresponding action plan.
- New business opportunities need to be evaluated that can be incorporated and aligns with the existing expertise.
- The workforce should be trained for showcasing agility and skills to manage their roles efficiently. The upshot — flowing revenues, and minimal layoffs to compensate for the crisis.
Lesson 2: Diversify Business Revenue Streams
Uber’s ride business suffered due to low-trip volumes since the stay-at-home orders were passed across several countries. As a result, the ride-sharing giant had no choice left than to layoff 3700 full-time workers to weather the crisis.
Due to lower trip volumes in its Rides segment and the Company’s current hiring freeze, the Company is reducing its customer support and recruiting teams by approximately 3,700 full-time employee roles. In connection with these actions, the Company estimates that it will incur approximately $20 million related to severance and other termination benefits. — United States Securities and Exchange Commission
The good about this bad news — these layoffs could have been higher if it were not for Uber’s diversification strategy. They have recently revamped their Uber app for supporting their drivers.
The app introduced “Work Hubs,” where the impacted drivers can look for alternative jobs in the food-delivery, freight, and even work jobs across warehouses, food production sector, and customer service.
The organization did not put all eggs in one basket. It seems Uber already had a plan B and C in the form of Eats and Freights. The situation is similar to a plane that damages one of its engines on its course. Still, it can manage to fly to its destination while relying on the other engine because the engineers already planned for it.
The cost-cutting might get inevitable, but keeping your options open can help warm boot your business post-COVID-19.
- Investing in businesses that you feel confident about
- Experimenting with new business models
- Keep innovating and improvising
Lesson 3: Invest in Digital Transformation Initiatives
One of the errors that Uber made during its initial years was investing more heavily in adding people rather than technology. They were very reserved in the early days and did not feel the need to reach out to businesses outside their ecosystem.
I think because we were trying to add people at such a pace, we probably under-invested in technology along the way. — Troy Stevenson, Uber VP
They invested in the years to follow but putting 100% into digital transformation was still not their ultimate motive. However, COVID-19 has changed the perception of even those who were unwilling to change. The new agenda of businesses today — going all in and out on digital transformation to thrive in the post-COVID-19 world.
This is not only imperative for enhancing customer experience but serves as a backbone strategy in times such as these.
Investment should be equally divided where, running the business, digital transformation, and upskilling and reskilling programs get an equal share. Leaders should take a front seat and assure the much-needed balance.
Net Solutions’ F.O.C.U.S. framework highlights the constituents of the digital transformation strategy.
- Data analytics for measuring consumer metrics across platforms
- Product development initiatives for setting foot in uncharted territory
- Experience design initiatives for enhancing the customer experience
- Cloud services for maintaining a virtual infrastructure environment
Solve problems, but do it innovatively!
The current crisis brings a moment of epiphany for businesses that what they had known for years is not enough. The past few months have introduced the opportunity to learn, plan, and implement a change in the management strategy.
All three strategies equate for a combative approach to stay afloat in the post-COVID-19 world. To start with, take inspiration from businesses that are doing it right and learn from your mistakes and that of others. So that while you face the new normal, you can strategically make headway towards turning over a new leaf.
Request Free Consultation
Talk to our experts for your Digital Transformation needs