In early March, I published an article on how the coronavirus can affect global trade in timber and timber products. Now I can say that I was far too optimistic at the time and that the world has indeed changed in the last two months. In a way, it stopped.
At the beginning of May, I summarized the situation on the world market for wood and wooden products. At this point, most furniture stores are already open, but sales are not exactly booming yet, as uncertainty is still present and buying a chair or table is hardly a task essential for survival.
Most major construction projects are still ongoing, but at a much slower pace. The reason is that due to the mandatory safety distances between workers, fewer people can work on projects at a time. This may not even be so bad, as there will be more work left to do in the event of a recession. The situation is calming down, but it is still far from normal.
I noticed that companies dealing with wood and wooden products are comparing to some other industries behind in digitalization and using of internet. Those who stay healthy during the crisis and suitably prepare for the “DAY AFTER” will be the winners at the end.
- A PERIOD OF FEAR IS AN OPPORTUNITY FOR THE BOLD
During any crisis, there is always fear and entrepreneurs are afraid to invest and grow. Everyone is scared as they wait for signs of recovery and then they rush to invest, but they are too late and those who were better prepared take all the spoils.
The time of fear is a time of opportunity, which is exactly when we must prepare our company to await brighter times in the best possible condition.
The most important thing is that fear does not paralyze us. The bold used the time afforded to them during quarantine to contemplate the future, while the frightened wasted time by constantly following the news of the epidemic and live in panic. The bold focused on themselves, their business partners, the company and the products and not on the fear that was spreading around the world.
It is never too late to discover and implement new business models and the latest technologies that we can use to our advantage.
- USE OF THE INTERNET IN SALES AND PURCHASE
A large portion of sales have moved to the internet and those with good online stores have been able to attract customers who are now moving to the internet and will at least partially stay there as well. Selling furniture online is not an easy task, as everyone likes to sit on a chair or lie down on a sofa that they would like to buy, but it is still possible to bring the customer closer to reality with different tools and techniques.
I know quite a few companies that sell their semi-finished products and products on their online platforms and at the moment their sales are growing exponentially.
The most important thing when selling online is to properly display the products, which inspires trust in customers and convinces them that the purchase is safe.
Why do I emphasize trust? When we buy products made of artificial materials like plastic, the photo can show us a realistic picture of the product. We know, however, that no two pieces of wood in the world are exactly alike, and so the buyer must feel trust towards the seller to get exactly what he expects.
- DEGLOBALIZATION
Some countries are still isolated, elsewhere restrictions are still in place and international trade is hampered. In China, where they have restarted production already in April, they have major problems with timber supplies from Europe and America, and quite some productions have stopped again.
Deglobalization is a fact that will greatly change the business operations of companies. Of course, this does not mean that a European company will not be able to procure raw materials in Indonesia or South America, but it will have to find several different transport routes and back-up local suppliers. Of course, this is easy to say, because exotic wood cannot be cut down in Europe. It will be easier to adjust the part of production that depends on imported wood from overseas countries by transforming production in such a way that domestic raw materials will be used.
The coronavirus pandemic has forced us to look for suppliers who can supply us with raw materials or semi-finished products even during the blockade of global transport. If nothing else, we can now discover which of our neighbours can become also our supplier, and we also contribute to a cleaner environment, as transport is a major global polluter.
- RELATIONSHIP AND COMMUNICATION WITH CUSTOMERS
In this crisis, we need to stay in constant contact with our customers, keep them informed of the current situation and speak openly about any problems.
It can happen to everyone that they cannot realize already confirmed orders due to lack of raw materials or components, blockages in international transport or even the absence of manpower due to virus infections. It is important to inform the business partner immediately and to be truthful about where the problems are and when we will solve them. I always stick to the truth myself, and although a business partner is sometimes reluctant at first, he is always grateful for my honesty in the end.
As travel will be made difficult or somewhere even impossible until a vaccine is invented, and the travelling costs will raise, an alternative communication with customers will be essential. Regular telephone communication is of course indispensable, but sometimes it is necessary to see your business partner as well. The relationship is more personal and it is easier to talk if we look each other in the eye. We humans are social beings and visualists. Video connections also allow us to hold conferences, to share screens or files and enable other tools that are important for uninterrupted work. I managed to solve quality claim online, which I earlier thought would be impossible. Now I know anything is possible.
Without a successful video connection, you will be in danger of losing a customer sooner or later.
- BUSINESS OPTIMIZATION
The best time to optimize a business is when growth is positive, but in such times, most people think only of sales and profits. Many companies have faced the current crisis completely unprepared and now have to take drastic measures at short notice in order to survive. Unfortunately, many companies will not survive.
However, those companies that have the option to take a step back and consolidate, must do so immediately. Their first act should not be wage cuts or even layoffs. Remember, employees are the heart of the company. Nevertheless, get a piece of paper and a pencil and write down all the expenses, review all the supplier prices, talk to the customers and don’t forget to review all the contracts you have signed. It is during the boom that companies conclude the worst contracts.
When I helped restructure one of the solid board productions, I first reviewed all the contracts. I noticed that they had a very bad contract with the electricity distributor, as they overpaid for electricity by as much as 20% according to the market price. By terminating the harmful contract alone and signing a contract with a new distributor, the company saved twenty thousand euros a year.
The coronavirus epidemic has changed the world in a matter of weeks and at this point we don’t yet know how and when it will all end.
Let’s keep in mind that most people prefer to stay in their comfort zone and that changes are the ones that take us out of it. We should not resist changes, but accept them and use them to our advantage.
The world will never be the same again and completely new winners will emerge from this crisis. Be one of them.
