Many small businesses have been struggling with the economic fallout that the COVID-19 pandemic has caused. 92% of small businesses surveyed stated that the pandemic has negatively affected their business. Without having a strong plan and procedure in place, many businesses have been forced to close their doors permanently. It’s important that any small business owner prepares themselves for whatever future economic crisis that may emerge during their time in operation.
Create Access to Capital
When emergencies or economic issues arise, businesses must have a plan in place that creates access to capital when necessary. Working with a business advisor to create this capital is a crucial first step. Knowing which financial options are available and what the best course of action to take when the time is necessary to access one of them is important to know.
Having accumulated savings in a business account that can be drawn from during emergencies should always be a top priority. For many, however, these savings probably are not enough to cover every situation at hand, which means that alternative financial resources may need to be utilized. For example, the Small Business Administration offers loans for small businesses to take advantage of when needed. This is a great funding source for any business looking for an option that is flexible with requirements and low in risk. Another option that businesses may want to utilize during this process is taking out a loan against their home’s equity. Utilizing the equity that has built up over time in a house is a convenient way to access vital funding. Experienced business advisors are able to help business owners identify which option is best for them.
Innovate When Necessary
Some of the world’s leading businesses have emerged out of economic recessions by innovating their products and services. Companies like Netflix, Microsoft, and Apple have all successfully overcome the issues of a struggling economy. Rather than succumbing to the downturn and closing their doors, these businesses were able to innovate their offerings to meet the needs of their modern consumers.
For small businesses that may be struggling, this could be the route that they need to take. Though it can be difficult to transition into a new market, finding niche opportunities can make the change worth it. Conducting market research and understanding what needs are yet to be met can help a business appropriately position themselves in the market.
Focus on Current Customers
It’s important for business owners to remember to keep their customers at the forefront of every decision they make. Customer loyalty is critical to succeeding, especially during times of economic stress. It’s much more costly to acquire new customers than it is to retain existing ones. Rather than investing in high-cost marketing activities, business owners should instead focus on building strong relationships with their customers to ensure their patronage resumes when they have cash to spend. During difficult times individuals are actively seeking out brands who are “doing the right thing.” Whether they are helping their customers, recognizing employees, or servicing their local community, all of these things help brands build positive relationships with their customers, new and returning alike.
Make Strategic Budget Cuts
When a business is facing a financial crisis, it’s likely that they will need to make some cuts in their budget. Being strategic about these cuts will help ensure that a business is still allocating enough toward important expenses while reducing spending on unnecessary items. Businesses should make it a routine to audit their budget on a regular basis. Knowing what expenses can be sacrificed should help quickly allocate funding toward the business’s necessities. For essential expenses, it’s worth considering alternatives to your standard procedures in order to find cheaper options.
Weathering an economic downturn is difficult for any business, but especially for small business owners. With a proper plan in place, business owners will stand a stronger chance at succeeding even during the hardest of times.
Sylvia Browder is CEO of Specialty Home Services LLC, a Home Improvement Company; a Small Business Consultant at Browder Consulting Group, a startup consultancy firm to help women with startup assistance, marketing, website and graphic design work and other support services. In addition, she has co-authored several published books; publisher of ‘Sylvia Browder’s Blog for Women Entrepreneurs’ a lifestyle blog; and publisher of ShopSpendBlack.com Business Directory & Blog platform created to help consumers find black owned businesses in a searchable format. In her spare time, she enjoys spending time with her husband of 30 years; 5 adult children and 5 grandchildren; church; friends and motorcycle riding.
