The Covid-19 pandemic has created a global economic tsunami, that initially hit China and is now slamming the US economy as more parts of the country require nonessential businesses to shut down. That is, as the COVID-19 pandemic exacerbates across the nation, numerous spots of business – small or huge – such as schools, offices, the New York stock exchange, theaters, wellness studios, document scanning companies, clothing and beauty stores have all been requested to temporarily shut down. This sudden halt in the economy and the accompanying economic crisis is bound to have a devastating financial effect in the United States which is unprecedented. The current situation has had a reverberating result on small businesses. According to America’s SBDC, a national study found that 69% of U.S. small businesses have already experienced a large drop in demand due to the coronavirus pandemic and 60 percent believe demand will continue to decline.
Coronavirus or COVID-19 that originated in Wuhan City of China, causes severe respiratory disease that can spread from person to person. It was declared as a global emergency on January 31, 2020 and announced as a pandemic on March 11,2020 by the World Health Organization (WHO) because of its high mortality rate. The crisis is causing turmoil in the U.S., where confirmed cases exceed 85,000-more than any other country. Since no immunizations are available as of now to prevent Coronavirus sickness, the ideal approach to prevent this ailment is to abstain from being exposed to this virus. As a step towards this and with confirmed cases of the coronavirus escalating rapidly, government officials have almost switched off activity in large sectors of the United States. They want as few people as possible in close contact with one another in order to slow the pandemic, which may be even more widespread than official statistics suggest (nytimes.com).
The study of small businesses by SBDC and Thryv Inc., found that 82% of small businesses are “extremely concerned” about the current business environment in light of the COVID-19 outbreak. Briefly, COVID-19 will be a shock to many businesses and could place their immediate future in serious trouble, and it is difficult to estimate the duration of this terrible crisis. As part of a comprehensive crisis management strategy there are a range of actions you should consider taking now to prepare your business for COVID-19, to place it in the best possible position to not only navigate through the crisis but to also be better prepared to take advantage of the recovery.
Here are certain tips and resources that would be immediately actionable and not time intensive:
- Update Your Financial Statements: Bring your fiscal reports up to date as it’s very important for you to have access to the most up-to-date information on the state of your business’ finances. This information will help you make the best possible decisions in a difficult environment.
- Obtain a line of credit: To support cash flowing out of your business – to keep paying rent, utilities, employees – but with less cash coming in, it’s better to obtain a line of credit or a low – interest loan.
- Have all necessary information with you: Make sure that there isn’t one single employee with a lot of key information. Because then it would be difficult for you to access information from him/her if the employee goes on sick leave or quarantine. Collect passwords and other key access information in one document that can be shared with you and your key employees.
- Supply chain: Assess any potential concerns related to your supply chain.
- Give reassurance: As everybody’s life is being disrupted, spread a message of optimism in your online and social media presence.
- Try to remain calm: As with any other business decision or set of circumstances, it is important to make a conscious effort to remain calm and collected to better evaluate the situation. Assess the situation objectively, inform yourself, and be sure to follow advice from credible sources to keep your place of business, your employees, your customers, and yourself safe.
- People need some normalcy to return: Level up your customer service game by having a remote / off-premise service game plan. According to McKinsey, this market has been experiencing consistent growth and this crisis will only accelerate this trend (zdnet.com).
- Reach out to your lenders: Before the situation is escalated into a bigger financial challenge, contact your lenders to negotiate short-term relief either in the form of deferred payments or extended credit lines. Federal and State government agencies have announced several relief programs, which make it easier for lenders to have these conversations with small businesses. Also, follow the latest information from credible sources to stay on top of emerging regulations that you will need to be compliant with, and for timely relief information announcements.
- Be empathetic in reducing employee hours: This tip works for businesses that are fortunate enough to stay open and not fully shut down, where you might reach a stage where some of your employees’ hours will need reduction. In such situations, talk to your employees about their financial situation, as it might save you from cutting down the hours for those who may be more dependent on the income from your business.
- Discounts benefits: According to ZDNet, while discounts are typically used as an instrument to promote store traffic, remember that several of your customers may have had their employment hours cut and are probably facing a personal cash flow crunch. Any discounts that help customers manage their expenses better, even for a short while, is bound to earn you loyalty in the long run.
- Listen: Communicate with your customers honestly, because maintaining a strong and positive communication channel with your customers is vital. Let them know what steps you and your employees are taking within your business to keep everyone safe. Let them know you value their business, appreciate their needs, and will do everything in your power to meet their needs as soon as it is safe and practicable to do so.
According to the latest news from nytimes, Adam Ozimek, the chief economist at Upwork, and John Lettieri, the president of the Economic Innovation Group in Washington, want the government to guarantee loans with little or no interest that small businesses would pay back over a long period, regardless of whether they lay off workers. Mr. Ozimek said it would be wrong not to help companies that have already been forced into layoffs by government decisions and delays in a federal response.
For small businesses, they can proactively invest in technologies like an e-commerce platform, mobile applications, social collaboration documents, and community and social platforms to better position themselves for growth and new business models. All businesses – be it small or huge – must stay compliant with the ADA and applicable state and local laws.
COVID-19 is another strain of virus, and it is exceptionally transmissible. Individuals need to settle on educated choices and keep on living their lives – with due vigilance.