Let's Get Real ... Small Businesses Need to Take Action Now
Updated: Apr 2, 2020
by Ben Armenta, President and CEO
Navigating #COVID-19 is unlike anything most organizations have experienced and I'm shocked at the lack of REAL guidance others are providing these days (others in the media and on platforms like LI). As a #smallbusiness owner myself, I'm imploring other businesses to act before its too late.
First, let's look at some facts. According to research done by GoldmanSachs around small business impact of COVID-19:
51% of owners say their businesses will only be able to continue to operate 0-3 months
75% of owners say their business has been impacted by fewer sales
Only 13% are confident about their contingency plan to meet the needs of their business
Based on guidance from the CDC and the White House, commonsense tells us that we have 4-6 weeks (at least) of conditions worsening and then roughly the same amount of time before we can begin to see light at the end of the tunnel (that's mid summer, folks). Just because the infection and death rate slows down, doesn't mean we're "back to normal."
I'm not being pessimistic. I'm just highlighting a realistic future for small businesses. It's going to get really ugly, really quickly. I've already had clients close contracts, furlough employees, and even close for good. So, now what?
Small businesses must answer this one simple question:
Can your business stay afloat with current revenues for 3 or more months?
If the answer is "no," then you have to act now. Even if it is "yes," what would your business look like in order to operate with 20%-30% of pre-COVID revenues?
Here are 4 considerations you should take-to-heart today:
Pay employees for as long as you can without disrupting vendor/supplier or debt commitments (note, renegotiating terms with partners is always recommended). Apply for grants today and talk with your financial institution about the SBA Payroll Protection Plan (PPP) as a tool for covering a couple months of payroll, lease payment, utilities, and mortgage interest.
Determine your company's exit strategy. Is it next week, next month, or next year? What are the signs that you need to execute your exit? Understand those signs now so you don't have to guess later. Hint: signs = something you can measure such as revenues, AP/AR cycles, or PO forecasts.
If you're unable to hire (or rehire) employees, support their efforts to file for unemployment benefits. Do your part by processing/replying to any inquiries from your state's workforce commission as soon as you can.
Don't spend money or time attempting to pivot your company without empirical evidence that it will work. Just like when you started your business, you must know it will be successful before you invest in it. All great companies are centered around satisfying consumer needs or really important "wants." Any time a business starts based on what the owner is able to do, without any real market evidence that consumers will buy it, the company fails. Just because you can do something different, doesn't mean you should.
Personally, I'm rooting for every employer and employee out there. I know this is tough ... I'm experiencing it too. However, its foolish to plan for the best case scenario. The more companies prepare for the worst, the better positioned they'll be for capitalizing on recovery.