In times of crisis, the future is bleak and resources are limited. With so many uncertainties and pessimism, it is no wonder that businesses hold back on investments and expansions. However, despite the dreary outlook, the opportunity to make a comeback is still present – with a ton of hard work and a dose of ingenuity. As cliché as it sounds, in every crisis, there will be opportunities present. Are you ready to embrace the uncertainties and seek opportunities, or will you be eliminated because of fear?
When we look back at the SARS crisis in 2003 and the Financial crisis of 2008, there are businesses that have improvised during the crises, and eventually grew and emerged stronger. And they have continued to stay strong even during the Covid-19 pandemic today.
2003 SARS Crisis: Alibaba
During the SARS crisis in 2003, 400 of Alibaba’s employees were quarantined for exposure to SARS during a trade show in Guangzhou. Immediately, Co-founder Jack Ma rallied the team to bring their desktop computers home and re-route customer phone calls to home landlines. The show went on – online and seamlessly – with many customers unaware that the company was working from quarantine.
It was also during this time that Alibaba launched its most lucrative business unit. As traditional face to face businesses were affected during the SARS crisis, Alibaba took the opportunity to partner with the Chinese government to train China’s small and medium-sized businesses on how to do business online. Eventually, Alibaba moved on to focus on consumer e-commerce in China. On 10th May 2003, Taobao was officially launched. It started a consumer e-commerce revolution not only in China, but all the way to Africa.
Today, amid the Covid-19 pandemic, Alibaba Group is not deterred by the economic downturn. It was announced last Wednesday, 6th May 2020, that Alibaba group has agreed to buy a 50 per cent stake in AXA Tower (Singapore), valued at S$1.68 billion. This is definitely a boost of confidence to the Singapore economy, and also reflects the financial strength of the company in difficult times like this.
2008 Financial Crisis: Netflix
The financial crisis of 2008 saw a rise in a media business that leveraged on the dying but once profitable video rental store and the new video-on-demand services. In the peak of the recession, Netflix gained 3 million members. They had implemented a new tv/movie streaming plan, which allowed unlimited streaming of entertainment a month, at a variety of price plans and different services.
As the economy continued to be sluggish even in 2009, consumers were cutting back on their spending on entertainment expenses, and were looking for cheaper alternatives. Netflix, with its competitive subscription prices, offered what consumers were looking for.
In addition, Netflix revenue model is based mainly on subscription. One of the first things that companies cut during a recession is advertising budgets. As Netflix does not rely on advertising revenues, unlike competitors such as Disney, it has not been affected by the cutdown in advertising.
In today’s Covid-19 situation, where many countries have implemented lock-downs or partial lock-downs, people are looking for different sources of entertainment at home, and online streaming of movies and shows continues to be in demand. This could plausibly see a surge in the number of Netflix’s subscribers if the situation continues.
Once again, Netflix revenue model has proven to be recession resistant. As of today, Netflix has over 182 million subscribers worldwide.
Covid-19: Emergence of New Ideas?
After the 2008 financial crisis, we saw the birth of many new multi-billion dollar businesses such as WhatsApp, Uber, Airbnb, Dropbox, Slack, Instagram etc. One common denominator of these businesses is that they are all started by young people. Most of them leveraged on technology, and these services are still used worldwide today.
Recession has led to reinventions, and I believe we will be able to see new ideas being developed into big businesses once again in the 2020s.
The current Covid-19 crisis is on a scale that none of us has seen before, and it is inevitably leading us into a global recession. However, opportunities are still present. Covid-19 has set the stage for unprecedented growth, especially since today, technology is the underlying foundation for many businesses.
Instead of being paralyzed by fear and panic in this pandemic, deeptech startups are still securing funding from Venture Capitals (VCs).
In the ninth edition of Singapore Business Review’s 20 Hottest Startups, fintech company Aspire, a small medium-sized enterprise (SME)-focused neobank, clinched the top spot, with S$46.38 million in funding from a series A round. Founded in 2018, Aspire serves a new generation of digital-savvy businesses with a mobile-first digital business account across Singapore, Thailand, Vietnam, and Indonesia. Its flagship Business Account, targeted at small businesses and startups, can be opened online in just a few clicks. The account is free, with no minimum deposit and no monthly fees. It also comes with an instant credit limit for daily business expenses and other tools to help business owners with cash flow management. Check out their Peer to Peer Lending Loans here!
Another fintech startup, Nium (previously known as InstaReM), has also announced last Wednesday, 6th May 2020, that it has raised a new round of equity funding (amount undisclosed), joined by new investors Visa and BRI Ventures. Nium started out in 2014 as a consumer-focused remittance business based in Singapore. It has since established itself as a global financial technology platform that redefines the way consumers and businesses send, spend and receive funds across borders. Nium operates in over 90 countries and in 63 currencies.
When times are tough, many companies struggle to stay afloat long enough for the economy to pick up again. Today Covid-19 serves as a wake up call for companies that have been complacent, stagnant and lagging behind in technology. Even corporate giants have to think out of the box to survive and thrive in difficult times. However, with patience, innovation and adaptability (and maybe sheer luck plays a part too), one can emerge strong and even reap profits during the roughest of times. Will you cling to how you did business ten years ago, or will you use this time to reinvent your business and transform into a better version? May greater opportunities arise from the Covid-19 pandemic this time round too. We shall not let Covid-19 bring us down!
Lesson learnt: The faster you accept the new reality, the earlier you begin to look ahead for new opportunities.
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