As a result of the pandemic, more than half of small businesses reported fear of permanent closure. COVID-19 is unlike anything we’ve seen in the last 100 years. In fact, it’s a dual crisis: A global health issue that tripped us into an economic recession.
Though we don’t know what lies ahead, we do know recessions have created seismic shifts in the way we do business. Just look at how online business boomed after the Great Recession of 2008/2009. Having lived through it, I can tell you that while it is challenging, it is possible to adapt and come out stronger on the other side.
Here are three ways your business can stay resilient:
1. Bifurcate savings
If we’ve learned anything from the pandemic, it’s that we all need to be better prepared for the unexpected. Small businesses, much like an individual, need a cash reserve, consisting of both short- and long-term savings. While many companies survive solely on cash flow, those who prioritize savings during the best of times bode well in the worst. For peace of mind and continuity of business, allocate a percentage of profit into a savings account that can handle up to six months of expenses, so during times of economic uncertainty, you are not the first out of business or solely dependent on government subsidies.
Also necessary is a savings strategy so you, the business owner, can retire. If you’re not already saving, you might be concerned about catching up. With state-mandated retirement plans for employees on the rise and the Setting Every Community Up for Retirement Enhancement (SECURE) Act offering incentives in the form of federal tax credits, now is the time to act for the betterment of your company by putting a retirement savings vehicle in place to help prepare for the future.
2. Re-think workflows
When stay-at-home orders were implemented, it forced the world to consider new work environments. To many, this was a shock. Whether it was dine-in restaurants shifting to take-out or brick and mortar offices, entrepreneurs saw the opportunity to take this forced change as a chance to adapt to the evolution of society and reinvent their small business. As a leader during these unprecedented times, you have to enable and empower your employees appropriately with the right tools and oversight to be successful.
Pre-pandemic, the old-school mentality that business as usual was the only right way had never been challenged. In recent months, leaders have realized that it’s okay to reinvent how you work and what you offer.
3. Pursue new opportunities to find and connect with customers
You don’t need millions of customers to be successful. Maybe, you just need the right audience. Today, the power of technology and computing can help us delve deeper into a subset of consumers and serve a specific niche while larger businesses who have served the masses are failing. This micro-economic environment has created an infinite amount of opportunities making it likely we see more individuals take the entrepreneurial leap of faith.
In the end, we can’t presume what’s right for each venture given natural subtleties and the unique perspective of each individual entrepreneur. In broad terms applicable to many small businesses: Be conservative, stockpile cash when and where you can, have an emergency plan in place and look for opportunity in chaos.
Chad Parks is the founder and CEO of Ubiquity Retirement + Savings, headquartered in San Francisco. For 20+ years, Ubiquity has helped more than 9,000 small and micro-sized businesses save over $2.25 billion in retirement contributions, pioneering transparent, flat-fee plans.
Recession stock photo by eamesBot/Shutterstock