A Financial Consultant and Chartered Accountant, Mr. Charles Mensah has described 2020 as a very difficult year for businesses.
According to him, the outbreak of the pandemic was an unexpected occurrence that took many businesses by surprise which has resulted in the collapse of many companies.
Speaking on PM Express on Thursday night, he noted that it was a challenge but at the same presents an opportunity for some businesses to make huge money.
“This year was very tough, very tough, especially at the initial stage when COVID hit us in the country and lockdown equally came in for our clients. Though it was a challenge, it brought some opportunities. You will realize that some companies amended their object clause, and started manufacturing sanitizers, nose masks as well as some brushes, buckets and cups, and so on.
“So, those companies who took advantage of the challenges will end the year very well and those who couldn’t because of naturally lack of money capital or where they find themselves will not close the year very well”.
He cited companies like Amazon as among the top list of those who made huge money during this period. “Guess what, they are in the internet businesses, they are in the logistic business. Much as the COVID was preventing us from doing things that we were doing normally, they were still delivering because people will need food to be delivered, medicine to be delivered. Naturally, there was an opportunity and they took it”.
According to him, COVID also presents the opportunity for people to keep healthy. This is because companies were manufacturing drugs that will boost immune systems, and some even went into research.
“Those who are rich will double their money depending on the industry that you are in. But if you are providing a service to an educational institution, there is no way you could make money because the schools were shut”.
Also, he cited restaurants, and car rentals as among the hardest hit business during the pandemic since people were not traveling and therefore could not check in the hotels.
He further noted that those businesses who also depend on the services provided by the business that were affected were also not spared, citing a firm that provides laundry services for a hotel or restaurant as an example since most hotels and restaurant outsource their laundry services.
“So, it depends on where you were when the thing hit us”.
“It depends on how quickly you readjust. Some got adjusted quickly around April, May thereabout. Now the new normal and everybody is operating. Now they have attached the internet, social media to their businesses. Since physical contact is limited, they use the internet to deliver their services to clients”.
Speaking on how COVID-19 impacted the operations of the businesses based on their sizes, Mr. Mensah noted that the year was very tough for the very small businesses, mainly because of a lack of capital.
But the medium ones were not affected much because they have capital that enables them to divert to other lines of businesses. He also pointed out that courier services have increased because people purchased motorbikes to enable them to seize the opportunity to deliver goods to people at home due to the lockdown.
He pointed out that the big companies always have a strategy, and they always do “what if analyses” and have all scenarios that they play.
“They went ahead, open their books and acted on their books”
According to him, due to COVID, some businesses had to shut down entirely but some had to renegotiate salaries with their employees to remain in business. He explained that some companies initially pay employees 80% of their salaries and then reduce it further depending on how the company performs. He pointed out that some even reduce it by 50% and almost 40% in some instances.
He, however, indicated that he wouldn’t advise employers to go in for loans to pay bonuses during the festive season, but only on the condition that the company is sure that it will have some funds flowing in early next year that will enable them to pay off the loans.
Also speaking on personal financial management, Mr. Mensah admonished individuals to focus more on the development of skills to increase their incomes to make their expenditure sustainable.
According to him, failure to plan will result in shocks when the unplanned happens.
He pointed out that instead of depending on just one source of income, people should diversify their portfolio and venture into additional businesses through the development of new skills.
Overspending during the festive season according to him is not the right thing to do but rather “Christmas ought to be part of your expenditure plans for the year”. This, according to him, means that you need to start planning for the Christmas season from January because unlike COVID, Christmas is a sure event.
He emphasized that the only way to sustain your expenditure is to constantly improve your skills and diversify your sources of income.
“Any increase in skill, increase your income”
