Since March, businesses have immediately faced the adverse effects of COVID-19. Entrepreneurs and small business owners developed new and innovative ways to sustain cash flow, continue business operations, and make payroll. The U.S. Small Business Administration rallied behind businesses with the Payroll Protection Program (the “PPP”), enabling companies to keep employees on the payroll.
As a partner at a law firm, I witnessed many of our firm’s clients benefit from PPP funds and implement new strategies to tackle the long-term economic effects of COVID-19.
Here are some key tactics I have observed with businesses that have survived and thrived during COVID.
Continue to Stay Agile with Finances
In the absence of an economic downturn, it is always advisable to tighten the belt. Now is a good time to tighten the budget and streamline internal finance protocols to develop a stronger financial path for 2021.
For example, submit invoices promptly and with a personal note or email letting the customer know that you acknowledge and have concern for how they are doing. If they can only make a partial payment, accept the payment, and be understanding, which will help maintain a good customer relationship. Owners should make it a point to meet more often to discuss the business’s financial status.
Maintain regular contact with your banker and banking institution, now more than ever. The PP loan proceeds highlighted the importance of a good banking relationship and its responsiveness. Many banks gave first preference to current clients. Find a bank that will support your business, provide you with the customer service you deserve and need, and will be helpful beyond the short-term.
Diversify Business and Client Type
Many small businesses are making changes, both big and small, to their target markets and clients to respond to the fluctuating business landscape. In a study conducted by SCORE, a U.S. Small Business Administration partner, 33% of new start-ups are seeking new target markets, 26% have changed their business model, and 21% have added new products and services.[1]
Small businesses should now be deliberate when choosing new business prospects or partners. In this new climate, entrepreneurs should avoid questionable accounts or projects. Reliable clients with the ability to pay promptly and a steady pipeline for future business prospects is key to survival.
Whatever your business industry, find ways to innovate and tap into new target markets. Whether it is undertaking new projects outside the normal scope, or offering new products and services, pivoting and adapting to a changing business landscape will determine your long-term survival.
Go Digital
With many business operations going virtual in the early months of the pandemic, traditional small businesses were forced to think outside the box to maintain sales figures. A key factor for businesses that survived the pandemic with minimal damage to cash flow were those that quickly adapted to an online platform.
This was true for fast-food restaurants. Restaurant chains with apps capable of quickly managing food orders were able to adapt to a rapid increase in online and pick-up orders.
In the last six months, 14% of all new start-ups have added enhancements to an online marketplace, and 13% have added delivery and pick-up options for all products. From online orders to touchless payment options, many digital substitutes are available to small businesses to minimize customer loss and revenue.
Social media is having a larger impact on small businesses during this time. Establishing several social media pages (Facebook, Instagram, or Twitter) where your current and prospective customers can contact you and view products and services is an added benefit. An eye-catching website and active social media participation that is user friendly and visually appealing will help increase your online business.
COVID-19 had a dramatic effect on small businesses by hampering growth and profitability. However, owners and entrepreneurs acted by moving operations online, adapting their marketing, seeking new funding opportunities, or even starting something completely new. In short, they learned how to survive and thrive.
