In the context of the COVID-19 crisis, financial and operational challenges are evolving quickly. Every industry and market has been disrupted. This is forcing many businesses to expand into online markets for survival.

For many companies, there has been a necessary move towards e-commerce driven by consumer demand. Travel bans, lockdowns and store closures mean that more and more of us are looking for services and products online. Household products, groceries and electronics are all increasingly being bought online; agile restaurant businesses have moved resoundingly towards delivery, and communication services such as video-conferencing and e-learning have been in high demand.

Here, we take a look at some of the challenges currently faced by businesses in crisis that are looking to move or expand into online marketplaces. We show you why a radical restructuring of your operations is usually benefitted by restructuring financially as well. Finally, we’ll show you how and why you can look forward to a brighter future.

3 Challenges Brought About By the Pandemic

The pandemic has brought about unprecedented times for businesses in every industry, yet different businesses will have faced different challenges. Nearly every company will fall into one of these three difficult categories:

1. The overwhelmed online business

Although businesses already operating online when the COVID-19 crisis hit were better placed to weather the storm, coping with the pandemic has not been easy.

The rapid increase in demand was difficult. Issues with supply chains, not having a large enough or sufficiently trained workforce to cope, and difficulties in order fulfillment and providing consistent delivery have been significant challenges.

Now, these businesses are facing increased competition as more and more rivals look for a share of the market.

2. The underwhelmed online business

Not all businesses with an online presence have been swamped with demand during the pandemic. Those providing luxury products or services, or anything considered non-essential will probably have seen a dip in demand. These businesses will have needed to look at diversifying their operations.

3. The offline business

Possibly the greatest challenges have fallen on those with little to no online presence at all at the beginning of the pandemic. They will have needed to grow their online business from scratch during the most challenging of times.

As you can see, almost every business has either needed to fundamentally change or rapidly adapt to the situation. And with this, they have had to navigate many of the difficulties that operating online brings.

The Challenges of E-commerce

Here are just some of the significant challenges that a move or expansion into e-commerce brings:

Merchandising your website

The selection of online products and services for a new, unknown marketplace

Technology

Selecting the right platform
Reliance on unfamiliar technologies
Developing a good customer user experience

Operations and logistics

Product procurement
Partnering with the right carrier
Ensuring order fulfillment
Providing online customer support

Marketing

Marketing online (i.e., social media marketing and SEO)
Onsite conversion
Nurturing loyalty from online customers

Talent

Possible changes in your talent pool
Hiring as necessary
Knowledge, skills and training

As you can see, surviving a new world of e-commerce is incredibly complex and challenging. It requires decisive action and, very significantly, immediate financial investment. If companies can act fast in restructuring their operations, they should be able to offset the worst of the crisis and recapture trade. However, this requires sufficient financial reserves.

Could Financial Restructuring Be the Key to a Brighter Future?

The act of restructuring your business means making significant and necessary changes to operations, finances, and other key structures to make your business as efficient as possible, both now and into the future.

When suddenly faced with such significant challenges as already discussed, financial restructuring may be the quickest and most effective route to recovery. It may provide the funds you need to both survive the short term and grow into new markets. If your business is facing an urgent need to fundamentally change its operations while experiencing financial distress, you should certainly look into financial restructuring.

Does Your Company Need to Restructure?

Here are some signs that suggest a business could benefit from urgent financial restructuring:

Cash flow problems
Being dept dependent
A medium-long term decline in sales
A shifting customer base
Reduced competitiveness

With the backdrop of the pandemic, there will be countless businesses out there that can identify with all five of these signs. Without the funds to invest in online operations, they face a difficult future. These are the businesses that should strongly consider a rapid restructuring.

How Financial Restructuring Works

Financial restructuring gives your business the opportunity to reposition itself. There are various forms of restructuring, which include the following:

Cost reduction

Businesses should look at cost reduction strategies if their running costs are proving too high, especially if their level of debt is rapidly increasing.

Strategies for cost reduction may include reducing and selling unneeded or superfluous assets. The workforce can also be reduced. It may also be beneficial to restructure departments to avoid unnecessary management costs.

Debt restructuring

You may be able to restructure your debt and consolidate it. This should mean it is easier to manage in the short term.

Mergers and acquisitions

One of the quickest ways to improve profitability can be through a successful merging of businesses. Mergers and acquisitions open the possibility of a rapid increase in production capabilities and a wider market reach.

How to Move Forward

If you can see that you would benefit from some independent advice on the best way to move your business forward, you would be wise to contact a company specializing in business formation services. Corporate service companies help both new and existing businesses craft unique solutions and strategies that will strengthen their place in the market.

They can help with all aspects of financial restructuring, including debt restructuring and mergers and acquisitions. If you are moving into the online and e-commerce world, you will almost certainly benefit from their professional expertise on business strategy, risk, both legal and tax compliance, and more. This is a complex area to navigate with numerous challenges as mentioned above.

But with expert help at hand, you have every reason to be optimistic that your business has a bright future ahead.

AUTHOR BIO

Naresh Manchanda is a Partner at MBG Corporate Services, an international organization supporting clients across Asia, Europe and the Middle East and providing sustainable solutions and strategies that drive business transformation. Established in 2002 and headquartered in Singapore, MBG is a 450-strong member team that operates out of Europe, the Middle East and Asia, providing Legal, Risk, M&A, Tax, Strategy, Technology and Audit Services.