Everyone in the world is in the midst of one of the biggest economic downturns of all times. Almost all businesses are affected in one way or another. Although some online businesses and suppliers of critical needs and healthcare products might be prospering, most other businesses are feeling the sting of the global pandemic.
Due to the COVID-19 virus, a generalized statement can be made, “Business is down, now what?” For small businesses and SMEs, this situation can be a negative factor to net income if not outright disastrous for survival. Larger businesses certainly have the ability to “weather the storm” better than their smaller counterparts. Of course, plenty of large businesses (airlines, auto manufacturers, cruise ship industry, etc.) are having their economic problems, as well, figuring out how to survive. So, businesses have two options: do nothing or plan for the future.
Do Nothing – Doing nothing is what many small businesses and SMEs will do during this moment of crisis. Any business…retail, restaurant, service, medical, dental, professional services…may temporarily close (voluntary or involuntary), lay off employees (with or without pay depending on the financial strength of the business), and/or reduce expenses as much as possible.
Doing nothing, however, is not positioning the business to take advantage of when the pandemic starts to diminish in intensity and the economy starts to rebound. Businesses that do nothing now will either be out of business completely when the turnaround starts or will be behind the competition compared to those businesses that prepared for the recovery.
Plan for the Future – Planning for the future is exactly what should be happening right now. Procrastinating planning is similar to doing nothing that results in no forward progress being made. The following are preventive measures that if taken now will allow the business to recover more quickly:
- Contact lenders – Keeping in close contact with bankers or other lenders is important. Everyone understands the negative impact of this global problem and, most likely, will work with business owners who are having a cash flow problem to temporarily delay or adjust existing payment schedules. No one likes surprises, so communication is essential during these times.
- Stay in touch with customers – Regardless of the type of business, customers (clients, patients, etc.) are a necessity more than ever for the survival of small businesses and SMEs. With email, text messaging, and social media, it is easier than ever to communicate with customers on a regular basis. Businesses should keep customers up-to-date regarding what they are currently doing, how the business can assist during these troubling times, and what will happen when shelter-in-place orders are lifted.
- Help employees – Employees are a company’s greatest assets. Without loyal employees, a business with superior products or services might succeed but not to the extent possible if loyal employees are on board. Although there is and certainly will continue to be an upsurge in unemployment, businesses should do whatever is financially possible to assist laid off employees letting them know they will once again have a job as soon as possible.
- Inventory – Inventory is vital to most businesses. Having either an oversupply or undersupply of needed inventory items is not optimizing available cash and/or credit. The right inventory (what sells) and sufficient inventory (correct amounts) should be the goal of every business. This means that inventory amounts might have to be lowered during this business downturn, but the business must have adequate inventory available when the economy starts to rebound. When this happens, sales will be hindered if inventory is not available.
- Special price concessions – When business is down, this is an appropriate time to offer price concessions to loyal customers and new prospects. This might be a discounted price, extended payment plan or warranty period, special delivery method, or anything else that adds value to a product or service being sold. The idea is to entice buyers to purchase from you rather than the competition and to purchase now rather than later.
- Marketing – Although the current crisis might dictate that some marketing efforts be scaled back for the time being, it cannot be eliminated completely. Customers must know that a business still exists and will be available to customers in the future. Therefore, businesses should work on both current and future marketing campaigns. The time for planning is now rather than waiting until a business realizes that the global economic situation has reversed itself and marketing must be implemented.
Summary in Two Words – Planning and leading are two important ingredients necessary for all businesses to survive this global disaster.
- Every decision in a business must be planned with the thought of what effect that decision will have both for today and the future of the business. It is more important now than ever that business owners be mindful of positive and negative effects every decision will have on the business. When an owner realizes that the very existence of his or her business depends on prudent decisions, planning takes on a whole new outlook.
- Now is the time for business owners to become leaders as never before. They must show strength and be positive and upbeat in the face of adversity for employees, customers, family, and themselves.
With each passing day, the world is one day closer to recovery. Perhaps not immediately, but still one day closer. Remember, these times too shall pass.