steps small-business owners can do right now

Danielle KostSmall businesses who have been able to survive the coronavirus so far and are now facing the next challenge, what should they do? Karen Mills outlines the steps entrepreneurs, and the government should start immediately.

11America small-business owners quickly moved after COVID-19 announced the closure of businesses in March. Restaurants that specialize in fine dining switched to takeaway. Book shops started curbside pickup. Gyms offer classes online.

The business owners were just required to confront this once-in-a-lifetime event and get through the next few months, after which normality would return. The Paycheck Protection Program (PPP)–government-funded forgivable loans designed to help businesses pay their employees–would help them weather the storm.

After six months, there’s no sign of a resolution to the epidemic and no simple solutions for small-business owners struggling to make it through. Strict safety protocols need to be more to get customers into small-scale businesses, and many owners hammered by overhead costs and inventory issues must make difficult decisions.

“This is the worst small-business crisis of my lifetime, and I’ve seen a number of tough moments,” says Karen G. Mills, senior researcher at Harvard Business School. “I’m quite concerned that we haven’t even seen the tip of the iceberg of business closures.”

Yelp, an online review site, estimated that 73,000 small-scale businesses across the United States had closed permanently on July 10. Then, almost half of the business owners surveyed in the latter part of June by the business online network Alignable reported that they could not raise enough cash to make it through for a month and had less than 50% of their sales before the pandemic.

“I’M QUITE CONCERNED THAT WE HAVEN’T EVEN SEEN THE TIP OF THE ICEBERG OF BUSINESS CLOSURES.”

“We’re finding that you can’t save businesses by just allowing them to reopen,” Mills states. “Until it’s secure the employees won’t want to return. Customers don’t wish to return. There’s nobody going shopping along Main Street.”

The outlook is grim, yet business owners have options, according to Mills, who was the head of the US Small Business Administration from 2009 to 2013 and served as a former Obama cabinet minister. The next few months will require extraordinary ingenuity and trickery on the part of the business owners and additional streams of help provided by federal authorities.

Mills provides three tips to cash-strapped business owners:

The focus should be on social networks and emails to contact customers. The coronavirus epidemic forced a lot of traditional businesses to adopt digital technologies, including payment solutions that are contactless or online-based booking programs. In the final week of August, around 25% of the respondents to this survey US Census Bureau’s Small Business Pulse Survey indicated that they used more online platforms to market their products and services.

However, businesses don’t require an extensive digital strategy — or even a website to be successful on the Internet. An Alignable study discovered that 25 percent of respondents used social media to connect with customers, while 18 percent engaged with the customers through email.

The crucial thing is to identify the most efficient channel for a company’s goods and services, Mills states, drawing on the experiences ofof milliner Linda Pagan, owner of The Hat Shop in New York.

“She decided to create these crazy videos and put them on Instagram, and they’ve taken off,” Mills states. “She still takes customer orders over the phone, but now she has a few more sales per day and says that’s enough to make it through.”

Review every cost. Every dollar counts today. Companies hanging by a thread must attempt to negotiate new contracts with landlords and suppliers and refinance the debt. Do you have a new supplier for an essential item that the business uses? Do opening only during peak traffic hours help reduce the cost of electricity?

For the first time in their lives, owners of small businesses that account for their business monthly may need to keep track of their day-to-day spending to respond swiftly to changes in economic conditions. Low-cost and free tools offered by Fintech and banks can analyze financial performance using live dashboards, making tracking more efficient.

“Small-business owners tend to focus on their customers, and on their products and services,” Mills adds. “They typically don’t have the enough time for accounting and paperwork. However, understanding your cash flow is vital in situations like this.”

Concentrate on the top profits. Small-business owners should determine their most valuable products and services and eliminate everything else. If a burger from a restaurant is more profitable in gross margin than its cheese plate, then it’s the right time to get rid of the cheese, at a minimum, for the moment.

It’s equally crucial for businesses to know the most loyal and lucrative customers–who they are, the products they purchase, and how to reach them. Beyond their purchasing power, loyal customers can become the company’s most influential advocates, delivering powerful, authentic, utterly free word-of-mouth advertising.

This kind of innovation has been yielding results. Sixty-four percent of small business owners claim they can operate in the current environment over an entire year, an increase from 34 percent a month prior in the results of a CNBC/SurveyMonkey study of owners of small businesses.