Businesses everywhere are feeling the impacts of the coronavirus pandemic. We examine the effects and look at small business coping coronavirus approaches.
Small Business Coping Coronavirus Strategies
Small Business Coping | Coronavirus Economic Impact
No one knows for sure what the long-term impact of the coronavirus pandemic will be. Companies whose employees can work remotely, such as software companies, will likely come out best. In contrast, those whose businesses involve physical goods and services or depend on meeting in person may find it much harder to survive.
Understandably, business owners across the country are concerned about keeping their doors open and taking care of their employees. In the U.S., there are close to 30 million small businesses, defined as having fewer than 500 employees. As stated by 2019 data from the Small Business Administration, small businesses employ 57 million Americans.
Many businesses have already closed down, and unemployment claims have drastically increased since March.
Within a few weeks from the first confirmed case in the U.S., small business owners noticed less foot traffic. The owners of Eagle Harbor Book Co. Jane and Dave Danielson, say they only see ten customers a day. Before the pandemic, they had 100 or more.
One business owner in Blaine, Minn., Robin Green, thinks the effects of the outbreak will last six months to a year. Her shop, Angelique’s, specializes in gowns and dresses for special occasions. She’s noticed fewer customers, but she’s equally concerned about how the outbreak is disrupting the entire supply chain.
For instance, loss of income is the most immediate concern. Because of market cancelations, however, dress shops, like Green’s, can’t restock for next season. Meanwhile, factories are closed. Finally, most fabric comes from China, and if Chinese mills aren’t making fabric, factories can’t manufacture garments.
Small Business Coping | Coronavirus Best Practice
While the outcome is uncertain, implementing specific business practices may reduce the impact of the virus. Businesses have to adapt to the current situation, and small companies may hold the advantage in this regard.
If possible, maintain social distancing while working. For example, Eagle Harbor Books started delivering to customers’ homes and also offers direct shipment from suppliers. Furthermore, employees can do website upgrades and online marketing from home.
The next immediate concern is protecting cash-flow. Theater Latte Da, an independent theater in Minneapolis, has implemented a spending freeze and dividing expenses between ‘must pay’ and ‘would like to pay’ categories. Fixed costs include payroll, utilities, and insurance. They plan on using cash reserves and not spending funds on next season to focus on the immediate future.
Short-term planning is crucial to protect cash-flow. Founder and financial planner at Capital Benchmark Partners in Atlanta, Helen Ngo, advises small business owners to hold off on hiring new staff. While staff shortages may temporarily affect production, you don’t want to dry up your funds.
Small business owners should expect to use savings and emergency funds but plan how to spend savings wisely. Consider current needs as well as long-term needs before diving into savings. Most importantly, small business owners should weigh the risks and benefits of using savings to stay afloat.
Finally, long-term planning should include ways to recuperate losses as soon as possible when business resumes. Building strong customer relationships and driving loyalty during this crisis may be useful as a long-term strategy.
Small Business Coping | Coronavirus Action Plan
Like Theater Latte Da, business owners should make a crisis budget and determine fixed expenses.
First, figure out how much money is available. Look at all sources before including saving. For example, divert funds from future marketing or postpone non-essential business upgrades.
Next, reduce costs as much as possible. For example, if employees are working from home, cleaning offices are an unnecessary expense. Additionally, business owners can contact suppliers and service providers to negotiate payments or discounts. Some banks have shown their willingness to assist people during the crisis and may waive some service fees.
Allocate available funds according to the crisis budget and make adjustments as situations change.
Finally, use all available resources and take whatever help you can. For instance, The Small Business Administration offers disaster assistance loans, and other agencies are offering no-interest loans to businesses with cash-flow problems.
The Trump Administration is also providing loans for companies and not-for-profit organizations with fewer than 500 employees under the Small Business Paycheck Protection Program. The program aims specifically to cover payroll costs, including benefits, for up to eight weeks. But, companies can allocate a part of the loan towards mortgages, rent, and utilities.
The immense impact of the coronavirus pandemic and the uncertainty is overwhelming. Adaptability and planning are vital factors in weathering the crisis. Spend funding where it matters the most but find a balance between short-term needs and long-term goals. It might mean letting employees go or retiring later than planned, but taking these steps may help small businesses keep their doors open.
What strategies have you implemented to preserve your financial goals? Share your thoughts in the comment section!