The COVID-19 pandemic has been a bump in the road for start-ups and small businesses across the nation. Businesses are being mandated to close left and right, cashflow is running extremely thin, and companies are being forced to adapt or be at risk of closing their doors forever. Being that small businesses are at the heart of our economy, it’s important to note how these companies respond during the Coronavirus crisis. As a start-up or small business owner at this time, you should be asking yourself, “How can I find a way to make this debacle work?”
No money, More problems
Cash flow is one of the greatest issues that businesses will be facing during this COVID-19 pandemic. Brick and mortar locations have really taken a huge hit here, especially those with a very limited online presence. State governments are starting to mandate that non-essential businesses close their doors. Hence, if these businesses cannot serve the people, they cannot make money during this time. This is frightening for many business owners because no one really knows how long these mandates will extend for and bills don’t stop piling up just because of a world crisis. Most start-ups and small businesses don’t have a ton of excess cash saved up to cover these expenses and are surviving “paycheck to paycheck” as it is. There are nearly 30 million small businesses in America with almost half of them exclaiming that the COVID-19 pandemic has caused a significant, unprecedented decline in revenue. These temporary closings can easily turn into permanent closings for a lot of businesses if they don’t find a way to adapt.
The government and other large companies are working to provide some sort of relief to these businesses because they know the importance of small business in our economy. One thing we are seeing at the state government level is that evictions and utility disconnections are being temporarily halted for non-payment. We are also seeing other companies and service providers removing late fees and granting extensions to help provide relief for small businesses that are currently struggling to pay their bills. These efforts are great and all for the time being but, what happens when this temporary relief goes away and many of these companies are not yet on their feet? Businesses are going to be left with large compiled bills that they can’t afford.
The federal government and other private agencies are also working to provide small businesses access to loans and grants amidst this global adversity. This can be a good thing to help keep businesses afloat that otherwise would not be able to qualify for a loan at this time. However, it is important that you read and understand the terms of this loan before signing up. Also, be sure to protect your intellectual property prior to signing up to take on a loan or grant. You don’t want someone else to find a way to own rights to the things you do for your business while using their money.
Is your business online?
Fortunately, even in the most trying of times, waiting on the government to come to the rescue is not the only way to make things work. One of the biggest saving graces during this pandemic happened to fall in our laps during the rise of the 4th industrial revolution, digital technology. Start-ups around the world were already shifting more and more to online/tech-based ventures, but now more than ever, we clearly see the importance of businesses establishing a virtual presence. Those who have already done so, have seemingly been the most prepared at this time.
COVID-19 has exposed some of the major benefits of having an online business presence. Most online businesses have not been mandated to close shop like many of the brick and mortar locations across the US. Therefore, they have experienced a limited interruption of their business operations, haven’t had to furlough as many people, haven’t experienced a huge loss in cash flow and in many cases, they will see a rise in online sales at this time. The businesses that practice both online and physical business models have had an easier time shifting their businesses to a completely online model for the time being. However, this may not be the best option for those businesses without a previous online presence established.
Switching to an online model especially amid a global pandemic is quite time consuming and damn sure costly. Another thing to beware of is the potential closing of warehouses and manufacturing plants. As the cases of Coronavirus rise, we are seeing them emerge in more and more essential places. Recently Amazon had to close a New York delivery center, due to one of the workers their testing positive for the virus. If more delivery centers, warehouses, and manufacturing plants must close due to internal company outbreaks, this will leave a lot of online retail businesses to suffer from a limited stock. Or worst-case scenario, if deliveries begin to contribute heavily to the spread of the virus, the government may impose mandates to put a stop to online retail businesses as well.
Expect the unexpected
As a business owner, it is up to you to be a chameleon and adapt to whatever bullshit the world throws at you. This can lead to some very unexpected outcomes. COVID-19 has abruptly come and turned everyone’s routine upside down, but now is not the time to let it defeat you. One way you can adapt your business operations to fit around all that has come with Coronavirus is adopting a work at home model. There are many free and affordable platforms that you can use to keep your team/staff connected even while apart. Not only will this keep your business operating, but it also show your employees that you care about their well-being. It allows them to the opportunity to practice social distancing and still support their families instead of being laid-off. And who knows, you may find a rise in overall productivity using this model.
A very interesting effect that the Coronavirus outbreak is currently having is the birth of new entrepreneurs. With so many people facing layoffs and furloughs, most Americans are severely in need of money right now. This has prompted some people to take the risk and start an online business to supplement the income they’re missing, and it wouldn’t be surprising to see these numbers continue to rise. We’ve already seen early on people begin to gravitate towards the resale business and have had much success. If you already own a small business, you can capitalize on this too. Many small businesses are effectively contributing to the solution while also keeping their businesses afloat by producing products like hand sanitizers, face masks, soaps, and disinfectants. However, don’t try to be the idiot that tries to take advantage of consumers with price gauging. The government along with online resell platforms are cracking down on people trying to hike up the prices on these products due to the increasing demand.
Lastly, and probably the most important unintended effect that the COVID-19 pandemic has brought to start-ups and small businesses everywhere are the time to reflect and get a grip on expectations for the future of their businesses. The fact of the matter is not every business is going to make it through this pandemic and that is ok. Sometimes you can do everything right within a business and still fail. Shit happens, but you must be smart enough to know the difference between when to try harder and when to walk away. Take a step back and realistically evaluate where your business stands and if you can come back from a hit like this.
COVID-19 has taken the whole world by storm and will have some lasting impact on the business as we know it today. We will see the strongest businesses evaluate, adapt, use their resources, survive and even thrive in some cases. Whether it is through government assistance, digital means, or crafty innovation, small businesses must strive to power through the crazy effects of this global pandemic. The future of the American economy is resting on the backs of the 30 million small businesses across the nation. So again, I encourage all start-ups and small business owners out there to ask yourself,” How can I find a way to make this shit work?”
Be bold, be disruptive…. That’s how you win. The only thing you have to fear is fear itself. Now go make a killing.
Ziad K. Abdelnour is Founder, President & CEO of Blackhawk Partners, Inc. a private “family office” in the business of originating, structuring & acting as an equity investor in strategic corporate investments and co-Founder of Blackhawk Development Group LLC; a trading platform focusing on the financing of real estate, infrastructure and project finance properties throughout the US.
