This originally appeared in Rutgers Business Insights on June 1, 2020
Advice for struggling small business owners: Pivot, Prepare, Care
Businesses that are able to adapt may be able to succeed in the aftermath of the Covid-19 shutdown.
We all know that small business owners have been hit hard by the current COVID-19 crisis. In a recent survey by the National Bureau of Economic Research, less than 40 percent of small business survey respondents expect their businesses to be opened by the end of 2020. Earlier surveys by FEMA have found that 40 percent of businesses failed to reopen after a disaster and another 90 percent failed after two years.
Recently I spoke with small business owners via Zoom in my role as a mentor for an organization called SCORE (Service Corps of Retired Executives). After outlining these sobering statistics, in which very clearly the odds are stacked against them, I nonetheless suggested there’s no reason to despair; although there are a lot of things beyond their control at the moment, how small business owners respond is very much within their control. The following is a shortened and slightly updated version of my talk.
What do you think these companies have in common other than they are all household names: GE, IBM, FedEx, IHOP, Trader Joe’s, Hyatt, Burger King, and HP? They all started during depressions and recessions. Despite what’s going on these days, I really believe there are still opportunities for entrepreneurs to succeed, and even thrive. After 9-11, there were a lot of businesses in Manhattan that failed but some others, especially those who adapted, were able to succeed.
Here are three tips that are important especially for small business owners to remember: pivot, prepare, and care. I believe that these are close to the secret sauce that you need from a human resources perspective in order to restart your businesses successfully.
The first tip is to pivot by reexamining your business model. Now may actually be a great time for you to step back and reexamine all aspects of your business, especially since you have a little bit of breathing room and time. Don’t assume your customers are all going to come back and expect everything to be the same as before. It certainly will not be business as usual for a while. Yes, it’s been said that there will be a new normal; that’s a fact. So, begin by asking yourself: if you were starting over again, which in a sense is what you are doing, what will you do differently?
I suspect that many of you are already thinking about your business differently and some have started to adapt. But you need to step back even further and take a hard look at these three aspects of your business: what you’re selling, to whom you’re selling, and how you deliver. How can you adjust and adapt to each of these? Can you diversify your product or service? Can you expand your customer base? Can you change your distribution method? Remember what Warren Buffett once said: “The most important thing to do if you find yourself in a hole is to stop digging.” At the same time, keep in mind that your two top business priorities ought to be conserving cash and maintaining your current customers.
Many small businesses have taken to Zoom to expand their services and attract new customers. Even funeral parlors are offering memorial services through Zoom. Personal trainers have been offering Zoom classes for some time now, but a few are also offering classes not just to their customers but also to their customers’ children. Some small businesses are partnering with other businesses. For example, there is a restaurant in Connecticut that has partnered with grocery stores in the area to sell them prepared meals which these grocery stores then sell to customers. A local florist has partnered with the home decor business in her town so that when customers order from this home decor store and receive their order, there is a surprise bouquet from the florist that comes with the delivery (with a coupon included).
Some of you are familiar with a business tool called SWOT, in which you examine your business’s strengths, weaknesses, opportunities and threats. While this can be done yourself, use this opportunity to involve your staff in doing this SWOT analysis as a team. This can even be done through Zoom.
The second tip is to prepare by making your employees’ health and well-being a priority. Remember that your employees are worried and you cannot run your business without them, so make sure you show them they are your priority too. This means, first of all, educating yourself about applicable federal, state and local requirements for preventing the spread of COVID-19 and for getting funding. These guidelines and requirements are constantly evolving so you’ll need to check the latest updates from the CDC regularly.
Have a preparedness plan and procedures in place for employees; for example, make sure you have adequate face masks, sneeze guards, plexiglass dividers, social distance markers, hand sanitizers and disposable wipes. If you are shipping or receiving products, make sure your employees have the right cleaning supplies for wiping down and disinfecting. Enhance your regular housekeeping practices by deep cleaning regularly.
And if you offer teleworking and/or flexible hours, make sure you set clear expectations for employees working remotely, for example, when you expect them to be at their desks and how frequently they should be communicating with you. You also need to protect your business by making sure that their homes are safe (e.g., adequate electrical equipment and lighting, smoke detectors, etc.) and that their homeowners’ policies are up to date. Check with your insurance provider on your own coverage and do a cyber security audit (e.g., two factor authentication, anti-malware software).
The third and perhaps most important tip is for you as a business owner to care by rebuilding morale. Your employees need a boost right now, and I suspect that most of them want to go back to work. The key here is to engage with your employees. Are you in regular contact with them? Are you communicating with them and are you aware of their concerns about pay, safety, and their well-being? Research suggests that what your employees want most from you during these times are trust, compassion and hope. The best bosses today are more like coaches; they make their employees feel that they are working with you and not that they are just working for you.
Your employees are looking for signals from you. Of course you need to strike a balance between honesty and hope. It’s important not to sugarcoat what’s going on with your business, but at the same time you need to give them some hope, especially with your outstanding performers who might start looking for other opportunities.