There are many resources available to create paths to solutions. Here are a few that every small business should be considering.
1. Utilize small business aid.
In early March 2020, the US government authorized $7 billion in disaster relief loans for small businesses affected by COVID-19.
This program aims to enable businesses that are operating in states with emergency declarations to borrow up to $2 million, repaying the balance over a 30-year period. The Senate has also approved a $480 billion relief plan that includes aid for small businesses.
The federal Paycheck Protection Program is another loan designed to mitigate the economic impact on companies with 500 employees or less. This two-year advance has an interest rate of 1% and gives businesses the option to borrow up to $10 million to continue paying their employees during the pandemic.
These drastic, yet necessary, measures are available to keep small businesses operational during a period of significant revenue decline.
2. Renegotiate contracts and debts.
In difficult economic times, business owners should look to reduce financial liability as much as possible. This can include requesting deferred rent payments, renegotiating vendor contracts, and refinancing loans.
If possible, it may also be advantageous to request banks temporarily defer interest payments on outstanding debt. Considering that not all states have banned commercial evictions, small businesses still are liable by eviction law to be removed from their places of commerce. Increase your liquidity by applying for a government loan or getting extended credit. Communicating early and often to negotiate new terms on your financial obligations is a smart move to ensuring you keep your doors open.
3. Transition to remote work.
There are 28% more full-time employees working from home now as a result of COVID-19. Every business has been challenged to rethink labor strategy and implement new work processes. Telework is no longer seen as a benefit but essential. Remote working options have been linked to the following:
- Decreased stress levels
- Increased talent pools
- Reduced costs for employers
- Higher employee engagement
Over 75% of polled employees ranked collaboration as “very important” to a productive workplace, so ensuring that each person continues to feel connected to the mission of the business is essential. Many employees will now be working remotely for the first time which will contribute to the creation of a flexible working environment and greater peace of mind for individuals. Small business owners will need to assess what functions can be done remotely and ensure the proper structure is in place so that employees can be successful.
4. Provide employee resources to manage stress.
According to a Gallup study, daily stress amongst employees has increased from 48% to 65% amid the COVID-19 crisis. Every business should commit to helping their employees cope with stress. Since each person responds to stress differently, an employer should look to provide critical support resources such as these:
- Employee assistance program
- Mental health resources (online therapy, psychiatrists, meditation class, suicide hotlines)
- Casual virtual meetups
- One-on-one video calls with company leaders
- Self-care challenges
5. Explore private sector financing programs.
The government is not the sole source of financial aid during this time; many larger companies are also willing to provide aid to small businesses. Facebook, for instance, is offering a grant package worth $100 million to small businesses in a bid to keep businesses running. Bumble is another example, offering grants worth up to $5,000 for women-run small businesses. Searching for local and national private funding is a great way to discover additional financial support opportunities.
6. Concentrate on redeploying employee skills.
Human capital is typically the highest cost for businesses so eliminating staff to save money is one of the first considerations when there is economic trouble. The hospitality industry is expected to see a 45% reduction in its workforce, which amounts to roughly 1 million jobs.
Considering the cost of employee recruitment, engagement, and retainment, every effort should be made to keep your team in place. While there are certain points where obvious cuts must be made to keep the business sustainable, a reduction in force should be a last resort.
By exhausting available resources such as the Paycheck Protection Program, businesses should strive to reallocate employee skills to other parts of the business instead of making immediate cuts. A talent assessment will reveal which employees offer the most value in a specific role and give insight on talents that can be repurposed for other jobs within the organization.
7. Fine-tune your marketing message.
In times of crisis, marketing should not stop; it should amplify. While many believe that consumers do not want to hear from businesses, this idea is simply not true.
While it is critical to ensure that you are getting the right message across, 77% of consumers said they want to see advertisements that explain how the brand is being helpful and providing value in such a challenging time.
Ensure that you clearly and consistently communicate with your consumers. Find ways to educate consumers and help them achieve their goals even if they cannot currently afford to purchase your product or service. Considering that global ad spend is down $20 billion in Q1 of 2020, fewer advertisers will be competing for ad space, giving small businesses that choose to advertise online more visibility at a reduced cost.
Surviving the challenge ahead will not be easy, but it is possible. Mitigate economic impact by using available funds, reallocate resources, and strengthen your marketing message to speak to the present needs of your target customer. As with all things in business, focus first on serving others well to yield the greatest possible outcomes.