We have entered unprecedented times. As small business owners, there is a new burden that has been placed on many of us like never before.
More than (updated 4/25/2020) twenty-six million
ten million Americans have become unemployed because of the effects of COVID-19. Analysts predict some 20,000 retail stores will also close because they can’t shoulder the financial burden of the pandemic until consumers can return to their normal routines.
For small business owners who rely on sales and steady cash flow, they see no other alternative than to cut operating expenses.
Unfortunately, a reduction in staff is often the first option to prevent a permanent closure, which many business owners say they will be forced into if the pandemic continues for months.
Here are some ideas for how small businesses can cope with the COVID-19 shutdowns and reallocate critical cash flow without having to permanently close.
Evaluate Industry Conditions
COVID-19 is forcing businesses to adapt. As a reaction to industry conditions, small business owners should explore and consider other revenue streams, even putting an e-commerce strategy into place. It’s all about how small businesses adjust to the disruption during pandemics.
An integrated approach to operations is vital. Executives and management can’t focus only on profitability factors to stay afloat.
Businesses must also emphasize performance, interdepartmental collaboration, and streamlined budgeting to continue operations even when loyal customers are unable to visit their brick and mortar locations.
A decade ago, corporations were able to apply disruption policies to handle exterior threats. For many small businesses, though, it was financially impossible to invest in such policies. But now, ten years later, technology advancements have enabled even small businesses to enact similar changes.
Today, there are service providers, software, and apps that can manage duties in-house like rerouting calls, performing administrative duties, or order delivery.
Going forward, you will want to keep track of what changes you make during these times, and then create a new policy and procedure to oversee future threats to your business, such as global epidemics or pandemics.
Here are a few areas that you should review to implement pandemic policies to overcome these challenges.
Cash Flow Analysis
Performing a cash flow analysis regularly, even during the good times, is a vital step for owners as it allows them to monitor and manage the financial health of a business. You need to know where your company stands and how long you can operate at its current operating level. How much revenue are you generating? How much cash do you have on hand? Where is the revenue going? A cash flow analysis will help you make critical decisions during a crisis.
Insurance Policy Coverage Examination
Some insurance companies protect against business disruption. But some businesses are learning during this mass economic downturn that some insurers are excluding coverage for COVID-19, even when protections are in place. It is very important to know what coverage you have so you can include it in a business disruption strategy. If you do not have a policy in place for pandemic business interruption coverage, you may want to consider investing in it.
Reduction In Hours Of Operation
One of the best ways to cut operations is a reduction in hours of operation. Not only will it allow you to keep your staff in some capacity, but it will help you to minimize the risks since most states have already implemented a restriction on non-essential traffic. If you do reduce your office hours, it’s crucial to keep your customers notified of those changes. In-store signs and digital channels, such as email, social media, and your Facebook and Google My Business pages, will allow you to do that.
Negotiate With Vendors And Creditors
Keep an honest and open line of communication with your vendors and creditors.
Most creditors will already have a protocol in place for reducing or postponing your payments. They probably have the ability to ride out the pandemic longer than a small business owner could.
Many of your vendors will also have thirty, sixty, and ninety-day terms, so you may be able to negotiate payment arrangements until the crisis has passed.
Check To See If You Qualify For Federal Stimulus
The longevity of millions of small businesses relies heavily on SBA stimulus loans and grants such as EIDL, Bridge Loans and the PPP.
The PPP or the Paycheck Protection Program, is an SBA loan program that small businesses with less than 500 employees per location can apply for through the banking system. It is a program that began on Friday, April 3, 2020, and unfortunately, all funds were reported as being depleted by Thursday, April 16th, 2020. Not all banks were up to speed on what was required in the first round. Congress is currently in discussions about releasing another round of funding.
Businesses were able to borrow up to $10 million with a 1% interest. The money was to cover operations and payroll for eight weeks for up to 500 employees. Business owners may also qualify for full lender forgiveness of those loans if they spend the money on qualified expenses, and their workers do not lose their jobs.
Consult With Your Employees About Policy Changes
Do not overlook the value of your workers. They tend to understand their roles better than some owners. Ask them for suggestions on how to keep departments running. You will find that employees will often be able to offer ideas for solutions to help you overcome the pandemic.
Assign Remote Duties
Analyzing the role of employees will allow you to see which departments can operate remotely or in a tech-friendly environment. Most back-office jobs allow workers to work from home when performing duties like customer service, accounting, IT, and marketing.
Switch Marketing Focus To Social Media Management
Keeping your customers informed is critical during an economic downturn. If you change operations, customers should be the first to know. Using your social media pages to educate, inform, or coordinate allows you to easily switch from brick and mortar to online operations.
You can also identify useful hashtags, like #BusinessName, #City, #coronavirus, or #supportsmallbusiness, to connect with customers seeking information. You can also use technology like push notifications to keep customers abreast of changes.
Implement E-Commerce Delivery Options
If your small business depends on customers buying products and services, you may want to reassign an employee or utilize a delivery service to ensure a steady revenue stream. Companies like Uber Eats, Postmates, or a local courier will be of significant worth to small business owners looking for local delivery alternatives.
Oversee Employee Health & Wellness
Employee health and wellness must remain your human resource department’s primary focus. The workplace needs to address physical and mental health and happiness as workers tend to quit during times of high emotional stress or when they no longer feel a sense of workplace satisfaction. Having a health and wellness plan in place will reduce pandemic anxiety and uncertainty.
Online Biz Direct is all about helping small and mid-size businesses thrive during challenging periods such as COVID-19. We invite you to connect with us to learn more about technological advancements to help your business prosper even during economic downturns.