2020 was a challenging year for businesses. The COVID-19 pandemic has been very tough on most businesses around the world. While it’s been challenging for companies to adjust to the “new normal,” by now, most of us realize that this pandemic will have lasting repercussions, and the need to pivot and adjust will probably be around for some time. If you’re a person who opened, bought, or expanded a company recently, you are probably angry. You didn’t ask for this. It isn’t fair. But this is one of those extraordinary times in history that robs us of the chance to collect our thoughts so we can confidently predict the future. We must make time-sensitive decisions. We must take action to survive the crisis.
Running a Small Business Requires a Focus on the Long View
For most small business owners, the great majority of their net worth is wrapped up in their organization. When a crisis like this one comes along, it can feel like your world is falling apart.
Some Business Owners and Entrepreneurs, or BOEs, are seeing years of hard work dissipate in front of their eyes. This can make you feel the urge to panic, so you must stay focused on your business’s long view.Reviewing the purpose of your company will help. Why did you start your firm in the first place? Who are you trying to serve? What are you trying to do? Who is ultimately going to benefit? As a BOE, who are you going to become during this crisis and how will these challenges force you to evolve personally? If you can reframe this crisis into a chapter in your life instead of considering it as a permanent state, you can start to think about what it takes to weather this storm. When you go back and focus on the “why” of your company, and reconsider what motivated you initially, it can help you stay sane. But just as importantly, it will help you stay driven.
Small Businesses Always Face Risk, so Don’t Fixate on the new Risk of This Crisis
These are scary times, and I am not suggesting for a second that you ignore the risks out there. In fact, I’m saying the opposite. Now is the time to acknowledge risk for what it is. Think about ways to balance and counterbalance possible risks, and make a plan for operating in this new typeof risk environment. Be realistic about risk, and plan around it. You can’t avoid it. But if you can stay nimble and manage risk for the next year and a half, go for it. Because the truth is that while they may ebb and flow, risks never really go away.
Honest Communication is Critical to Keep Your Customers and Employees Motivated
Uncertainty is a part of any crisis. Uncertainty is unsettling, even upsetting, to the people around you, including your employees, your customers, and even your family. However, you can provide some degree of stability just by being open and honest. Tell the people around you, “Here’s the situation. Here’s what we’re doing. Here’s my plan. Here’s what we’re going to look like on the other side.” Of course, there will always be people who don’t care or who don’t like your plan. Some employees will want to leave. Some customers will go away. Some family members may be angry. However, your honesty and transparency will help the people around you understand that every company goes through challenges and that greater forces are at work right now. As any business owner who has worked with his team through hard times can tell you, times of exceptional stress and challenge bring companies together. Being upfront can help galvanize your team.
If You Established Healthy Margins in Good Time, You now Have More Flexibility
If your margins were already razor thin, you’re probably struggling now. Having healthy margins in place in good times allows for price elasticity when needed during a crisis. If you have enough gross margin, you can discount without losing everything. Maybe you can give your customers more generous payment terms. Bigger margins may also allow you keep your staff, even when sales fall. However, a business with thin margins has no choice but to become part of the crisis when the world tilts.
How to Give Your Small Business an Extra 30 Days of Credit
Don’t underestimate the value of giving yourself extra time. For example, say you have a credit card with a $20,000 limit, $20,000 cash in the bank, and a $20,000 bill to pay. My advice would be to ask yourself, “When do I absolutely have to pay that bill?” If you have 30 days to pay that bill, take 30 days. Then look at your credit card and think about when you’ll get billed for this charge and when the payment is due. Usually, the amount won’t show up on the credit card bill for another 30 days AND you’ll have 30 days to pay it.By using credit to your advantage, you can give yourself up to 90 days before you have to spend the $20,000 sitting in your bank account.
Cash and Credit are Essential Business Tools: Know how to use Them
Even if you avoided credit in the past, don’t ignore its usefulness now. Using a credit card is essentially a bridge loan. Even when you pay a little bit more in interest, you still have a lower monthly payment. In today’s lending environment, borrowing is relatively inexpensive. So whether it’s a credit card or a line of credit, credit is worth having–and using.
Even When COVID Goes Away, There’s Always Another Crisis Around the Corner
As of this writing, the development of highly effective vaccines has been announced, and it looks like we can virtually eradicate this strain of COVID. But it’s unlikely that this is the only big crisis we will see in our lifetime. Health, weather, politics, and even world events act as external pressures on our businesses. These external pressures can increase at any time, sometimes overwhelming us. The good news is that preparing for a crisis helps your business weather the storm. The bad news is that eventually, storms will return or arrive in a new format. Your business will always face challenges. But with the right structure, preparation, and plans in place, you can come through challenges stronger than ever.