Crisis Management for Small Businesses: COVID Shutdown
In times of crisis or economic shutdown, many small business owners wonder how to help their businesses survive. From how to secure crisis loans for small businesses, to how to lower your business expenses, plus strategies to use a shutdown to your advantage, here are important tips for crisis management for small businesses. How to … Continued
In times of crisis or economic shutdown, many small business owners wonder how to help their businesses survive. From how to secure crisis loans for small businesses, to how to lower your business expenses, plus strategies to use a shutdown to your advantage, here are important tips for crisis management for small businesses.
How to Secure Business Funding Due to an Economic Shutdown
During an economic downturn, like the 2008 crisis or the coronavirus pandemic, it’s important for all small business owners to secure emergency business funding both during the financial difficulties caused by the shutdown and beyond to when the marketplaces will have returned to economic health.
For example, during the initial coronavirus lockdown, some companies business dropped to zero while others saw a reduction of 50% in profits. In times like these, it is important to see economic injury disaster loans to help bolster your company’s future due to the economic slowdown. Business owners should not only apply for crisis loans in order to stay viable during a slowdown but also to plan for near-term opportunities to grow your business.
Look at all available lending programs, whether those are for economic injury disaster loans or grants. Experts recommend you find out what the requirements are to apply for the maximum dollar amount available depending on the parameters of your business. In many cases, disaster or emergency loans from government agencies have extremely low-interest rates and flexible terms such that you don’t have to begin repayment right away.
Where Can I Find Emergency Capital?
Depending on the state or region of the United States where your business is headquartered, your options for capital vary. Accion Opportunity Fund is a microlender that offers flexible funding options, including microloans and lines of credit, in various areas of the country.
Small business owners should check with their city, county, and state governments to find out what lending programs they are offering to offset the damage done by an economic shutdown. He says to look for loans with a low-interest rate and slow payback term so that you don’t have to stress about making loan payments right away.
Negotiate Your Commercial Real Estate Lease Terms
While your business doesn’t have money coming in, you want to try to reduce your business costs as close to zero as you can. One of the most effective ways to reduce costs is to re-negotiate your lease terms while the dollars aren’t flowing. Initiate the conversation with your landlord or property manager to see if they are willing to change the terms of your lease. Ideally, you would ask for and receive a multi-month deferral of rent payments.
If you’re uncomfortable negotiating, remember the tenant-landlord relationship is mutually beneficial and the landlord needs your business to be viable in order for the relationship to work.
Make Difficult but Necessary Staffing Decisions
Ask yourself honestly if you can afford to retain your employees and stay in business until restrictions end and business picks up again. Draining your coffers dry and going out of business serves no one, least of all employees. Most business owners are having to make difficult decisions to reduce staff or reduce hours. It’s something you need to look at in order to keep your business operational long term.
Sometimes the answer will be a temporary reduction in staff, allowing those who are laid off to receive unemployment, which can be a win-win depending on the wages you were paying. Then when business comes back, you can hire back those employees who desire to return to the business.
Have conversations, and figure out what’s best for your employees. If you reduce hours and thus payment too much, your employees might be better off going on unemployment. As you secure funding, figure out how much runway you have given different scenarios until business returns. Frequently, you will need to be able to generate revenue or other substantial business activity to justify paid staffing decisions.
Find Revenue Opportunities
Small business owners need to look at both the short-term shutdown circumstances you can possibly capitalize on, as well as how long-term market changes can result in new and different business opportunities. For example, within the food and beverage industry, some businesses already have a system for delivery in place during short-term COVID-19 business restrictions. The saturation in the delivery business can make a return to normal profits difficult if not impossible, and so don’t be too hard on yourself if you still feel like your business is struggling, even with curbside pick-up and delivery in place.
Every retailer should be thinking about how much of your business you can move online. You can also look at how you can appeal to essential workers in your town or city. Richards advises considering partnerships, new sales channels, and shifting more energy into existing secondary revenue channels. Every bit of extra revenue you can generate is helpful, he says, both short and long term.
Turn the Shutdown Into an Opportunity
While no business owner would have reasonably wanted a complete economic shutdown, there are opportunities we can take advantage of while we wait. Here are some of the things that would be helpful to look at while you are less busy with normal business activity:
Identify and document operational improvements: Take the downtime to put together an operations manual by capturing and putting into written form how things get done. Identify the key areas of your business where it’s important to communicate the best practices of how your business operates.
Clean up your bookkeeping: As you’ve applied for capital, you’ve probably been confronted with how beneficial solid bookkeeping is, considering all the documentation you’ve been asked for. There are a variety of quality bookkeeping software tools out there, so now is the time to get that in place and cleaned up before you get busy again.
Current customer needs you can address: This isn’t about sales and marketing; this is about great info that can help your customers solve problems, have a relaxed attitude towards the state of the world, and offer whatever expertise best serves your customers. Providing helpful information like this can convert readers consuming the information you are putting out there into paying customers once your business fully opens up again.
Improve technology: Now probably isn’t the time to invest heavily in technology, but it’s definitely a great time for planning on what kind of technology improvements you’d like to make when the markets stabilize in the future.
Share your expertise: Help other business owners solve problems. Use social media to give people really good information who may be struggling. It’s a great time to be helpful and build your business network.
Reach out to mentors: Set a goal to learn something about your industry, new products, and new resources so that you will be in even better shape when we are all back to business as usual. Keep learning and growing, and don’t be stagnant during the downtime.
Rest: Business owners are often overworked. Use this time to recharge mentally and physically. Relax and carve out time to be more creative. The downtime is here, so give yourself time to get ready for the busy season that will come after the shutdown is over.
Be Optimistic and Proactive
Overall, small business owners should remain optimistic and proactive in keeping your business going beyond the economic shutdown. Maximizing the amount of capital you can secure is key, as well as cutting expenses wherever possible. It’s important to remember, things will return to normal—and not necessarily a “new” normal—but rather a better future that benefits all business owners when we experience a strong economic recovery.