Small businesses are the lifeblood of a community, but due to the impact of the coronavirus, they’re shuttering in enormous numbers.
While the government launches massive programs to help, it’s a race against the clock for aid to arrive before many businesses run out of cash.
Here, two University at Buffalo School of Management experts share their insights to help entrepreneurs and local businesses ride out the storm:
Act fast. Small-business owners must confront the situation and take immediate action to stay afloat, says Thomas Ulbrich, assistant dean for entrepreneurship and social innovation in the UB School of Management.
“Every business is a startup in times like these, so you should focus on cash flow — not profits,” says Ulbrich.
“Look for abandoned customers and leverage your skills and assets to provide them with a product or service they need. And don’t wait — the decisions you make today will have enormous ramifications for the future of your business.”
Keep cash flowing. “Offer gift cards, vouchers, coupons or another form of presale,” says Veljko Fotak, PhD, associate professor of finance in the UB School of Management.
“There are several platforms out there that allow you to issue coupons or similar incentives, and manage the logistics.”
Adapt and pivot. To survive a crisis, small businesses must get creative, Fotak says. Many retailers and restaurants, for example, have moved to curbside pickup and contactless deliveries.
“I have a friend running a brewery that now makes sanitizing products — and is actually enjoying a new, profitable niche,” says Fotak.
“I spoke to a restaurant chef who has discovered a talent for making cooking videos.”
Be prepared to bounce back. Eventually, the world will return to some semblance of normalcy, and businesses should take steps now so they’re ready to reopen.
“Evaluate your staffing and determine who you’ll need first, analyze your costs and consider increasing margins, and prepare for a staged reopen, including how you’ll market it,” says Ulbrich.
Invest in your people. Fotak says the coronavirus has created a liquidity crisis, which tend to recover in months rather than years, like banking runs or other financial crises.
“Firms that have retained their employees will have a skilled workforce ready to take advantage of the recovery and ride the rising tide,” Fotak says.
“Those that fired a large chunk of their workforce will discover how expensive — and time-consuming — it is to retrain.”
Likewise, Ulbrich says people may be the only competitive advantage many small businesses have left now.
Lean into that: “Move forward by hiring for fit first, eliminating nonperformers, ditching your annual reviews, building a ‘virtual bench’ of top potential candidates, and creating a work culture anchored in trust and accountability,” Ulbrich says.
Stay informed. The federal government has passed a historic $2 trillion stimulus package, and Congress is considering additional funding for small businesses.
But understanding and accessing that assistance is easier said than done, Fotak says.
“The stimulus bill is 800 pages long and full of legalese,” he says. “A good starting point to digest it all is the U.S. Small Business Administration website, which has a treasure chest of valuable information on available programs, including small-business loans, debt relief grants and paycheck protection insurance.
“And remember, it’s not only the government that’s helping out,” Fotak continues. “Plenty of firms are offering free access to their services to assist others — or gain market share for the future.”
Listen to your entrepreneurial heart. Above all else, one thing entrepreneurs need to get through this crisis — and succeed in business overall — is confidence.
“It’s a voice of confidence that says, ‘You can do this!’” Ulbrich says. “That can be a powerful force and help drive you forward through the dark valleys that every entrepreneur will experience along their journey.”