It’s a safe bet that no small business owner had “prepare for a pandemic that puts the economy on life support for weeks or months” on their Q1 2020 to-do list. A 2019 JP Morgan urban small business survey found that just over half had cash reserves that could carry them for longer than two weeks. Blindsided by COVID-19, many small businesses are struggling to adjust to new realities now.
What will the post-pandemic business climate look like? What should business owners be doing now to make it to the next quarter and prepare for the long haul? The answers vary according to the type of business you run and the community you’re located in, but there are principles that can help you make it through this time. Here are five to keep in mind:
1. Have a plan in place
As the saying goes, a failure to plan is planning to fail. It’s important to stay focused because a crisis that forces you to shut down, layoff staff, curtail services or deliver value in a completely new way — without warning — can inspire a “fight or flight” response, with the former resulting in impulsive moves and the latter in a feeling of helplessness.
Having a plan in place and executing on it to achieve short- and long-term objectives provides an operational framework, helping avoid impulsive decisions and take action to overcome apathy. While you can’t control everything, be sure to have a plan that addresses the issues you can control.
2. Be flexible
If there’s one thing the economic impact of the COVID-19 crisis demonstrated, it’s that things can change quickly. Keep that in mind as you navigate these uncertain times, and be ready to change your approach as new facts emerge. If suppliers are out of commission, it may be time to explore other options to protect your business and ensure adequate inventory.
A certain level of emotional intelligence is also important for flexibility. Formerly reliable employees may be dealing with new childcare situations or caring for ailing family members. If so, the situation calls for empathy on a human level but also flexibility in a business sense as you plan for employees to come back while remaining aware of potential obstacles on the fly.
3. Keep in mind that cash is king
If you were caught with short cash reserves when the pandemic hit, you have plenty of company. Now is the time to explore every option to increase liquidity, including CARES Act funding, Economic Injury Disaster Loan emergency advances, programs that can allow you to tap into retirement savings without a tax penalty, etc.
In addition to programs like that, you can explore other options to avoid cash outlay, including negotiating rent deferments with your landlord and payment terms with suppliers. Some breathing room on the accounts payable front may buy the time you need to improve cashflow and get back to something resembling normal operations.
4. Don’t just triage — be strategic
On a related note, as a business owner, your job is to manage the business, not just run payroll and pay bills. You’ve likely paid into the unemployment insurance system, which exists to provide relief to laid off staff. So, if you receive funding before you can bring employees back, allow that system to work until you can reopen.
Strategy can also come into play when businesses reimagine operations, taking advantage of new rules to serve customers. Examples include tele-dental exams to keep practices and patient relationships going during the shutdown and restaurants pivoting to take-out services, with some forming creative incentives like free signature cocktails to generate business.
5. Be a leader
Business owners don’t merely operate a commercial establishment; the best are true leaders, and leadership is never more important than when a company faces adversity. So, in an uncertain time like this, it’s important to provide guidance and demonstrate that you are in control of what you can control, even when you’re unsure of what the future will bring.
Talk to employees, suppliers and other business partners. Be as transparent as you can about your strategy. Leadership isn’t about putting up a false front but rather demonstrating that you’re being thoughtful about the future of the business, the decisions you’re making now and mindful of how the present circumstances affect everyone involved.
No one really knows what the “new normal” will look like, but given the scale of the pandemic and the far-reaching economic fallout, it’s clear that we won’t be returning to business as usual in quite the same way, at least not immediately. Your business will have to adjust in one way or another because of the effect the virus outbreak has had on customer incomes.
The business decisions you make now can position your company for a comeback and help you thrive in the new normal. So, keep these five principles in mind as you think about your options. By taking control of what can be controlled and showing empathy combined with strategic thinking and decisive leadership, you can set your business up to emerge from this crisis stronger than ever.