Small business owners are contending with some of the most trying economic conditions in recent memory. Suppliers are seeing their orders limited by a hobbled supply chain, shops and retailers are facing lower sales from a financially insecure client base and restaurants and bars are being forced to weigh the needs of their staff against the lower capacity imposed by socially-distanced dining areas.
But the most trying aspect of running a small business in the time of a pandemic is the reality that these conditions may continue for months on end. The U.S. and many other countries are already seeing a resurgence of infections and hospitalizations after just a few weeks of reopening measures.
Small Business Strife
The COVID-19 pandemic has put a halt to many business owners’ innate hopes for future growth. A recent article from William Dunkelberg, the Chief Economist for the National Federation of Independent Business, describes how 31% of small businesses reported a decline in sales between the first and second quarters of 2020, driven largely by a sustained drop in consumer spending.
These conditions have led to a rash of business closures. A report from The New York Times describes how nearly 66,000 small businesses have folded since March, while a local estimate in Seattle, WA, puts the amount of businesses at risk of closure as high as 20%.
Most recently, small business hiring data from Homebase has shown a clear trend of slowing or reversing hiring trends in areas with elevated infections rate. And while some areas have seen an uptick thanks to successful reopening procedures, it is certainly not showing signs of the immediate, V-shaped recovery many in the business world were hoping for.
Future-Proofing Small Business
The sum of all of this information is that the economic future is far from certain, and small business owners need to take action now in order to ensure the survival of what they’ve built. Even in situations where business has only been impacted mildly by the virus and associated shutdowns, owners should anticipate a time when they might need a reserve of working capital.
One key way small business owners are anticipating the uncertain future they are faced with is by investing in things they are certain of while being more strategic with more ambitious outlays. For instance, shifting business online by building out and improving a website or customer portal is a reliable way of connecting with your customers even if they are not purchasing as much, but also aligns with large e-commerce trends that were already prevalent before the pandemic.
Integrating or consolidating cloud services is another potentially valuable investment that has been made even more pressing by the current pandemic. International Business Machines Corporation (NYSE: IBM) Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) and Microsoft Corporation (NASDAQ: MSFT) have all seen massive growth in their cloud services branches over recent months following the shutdown as businesses and supply chains attempted to regain footing in the midst of the pandemic. Shifting more of your small business’ technology and computing requirements to a cloud vendor is a way of future-proofing your business while also potentially cutting down on in-house IT expenses.
Other options, like refurnishing a storefront to optimize space for social distancing or investing in PPE for staff and customers are other potentially valuable considerations. The important thing is to make financial decisions that reflect the new conditions the world finds itself in.
Bracing For The Long-Haul
On the other hand, business owners should also take a hard look at the current rate of revenue and extrapolate just how much growth they might be able to expect if nothing changes in the global health picture. This may mean making difficult inventory or staffing decisions that may affect your employees and customers.
While business owners will have to assess their unique situation when making tough decisions about how the business will operate in tougher circumstances, the most important thing is that they remain transparent and communicative with staff and customers. If it’s necessary to raise prices due to supply chain issues related to the virus, communicating that to costumers can go a long way in ensuring their support in the future.
And while cutting staff or putting some on sabbatical could be a long-term situation, talking with your team of employees and looping them in on management decisions can help in making sure the entire business is working together under shared circumstances.
There are unfortunately no easy solutions for the situation the world finds itself in. The pandemic represents an entirely new challenge for modern commerce.
Despite the uncertainty, thinking ahead remains the best way for small business owners for whatever hardships the world may have in store.
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