Dr. Sudhir Ruparelia (pictured) is Chairman Ruparelia Group. His shares his perspective on the COVID-19 impact on business. Read on!
We are entering into recession period globally and the exception is likely to be India and China with 2% GDP growth in 2020 which is way below -5 – 8% in the past several years.
For the benefit of all, I am sharing my perspective on such scenario on few aspects as below:
What will change during the slowdown
1. Spend on luxury
will come down drastically
2. Long-term / Capital expenditure such as construction, technology will be
almost cut to nil
3. Lifestyle expenditure such as salary, rent, infrastructure, entertainment
will be minimised
4. Working capital will be under tremendous pressure. Businesses will go out of
business especially those who are riding on borrowed working capital
5. New innovative business models will evolve
What will NOT change during the slowdown
1. People consumption on essentials will continue
2. Rise in Investment on ideas / technology solutions that will improve efficiency
3. Short-term trading businesses with healthy cash flow practices will thrive
4. Rise in investment on spiritual / self-learning practices
5. Value for money products / services will shine
What you should do as an individual
1. Hold back any luxury / high risk investments where visibility of returns is
difficult to predict
2. Minimise expenditure on the routine stuff – keep a watch on your lifestyle
spend – ask the question, is it really necessary!
3. Develop yourself on improving competency and developing skills to become
more sharper and efficient
4. Share the financial situation with your family members and educate them on
the family financial position and the plans to improve
5. Invest – yes invest on the right things. History repeats. Take risks based
on thorough research. This is not the time to follow tips.
What you should do as an
Entrepreneur
1. Take care of your employees – communicate more than ever. Be reasonable and
transparent with them
2. Use the slow down to improve your processes / people
3. Invest in technology / systems that will accelerate your reach in adding
value to your customers
4. Be frugal in working capital decisions and operating expenditure
5. Capital expenditure to be on hold unless there is clear visibility on the
associated returns
Let us get smarter by helping ourselves and economy to bounce back stronger. Let’s plan for the coming foreseeable.
Dr. Sudhir Ruparelia is Chairman Ruparelia Group
Thanks for your advice, Tycoon Sudhir