At this point, businesses large and small are feeling the pinch from the Coronavirus shutdown. Reports have emerged that Boeing, one of the largest companies in the world, actually has a net negative order position – meaning that the company has been losing orders.
For a large company like Boeing, it is almost assumed that the government will come to the rescue. But small businesses are mainly on their own. Sure, Congress passed a massive stimulus package in March, but reports are that the small business Payroll Protection Program is roughly five times oversubscribed.
Barring Congress coming back from their holiday to add more money to the program, the reality is that you are probably on your own. Even if you have been scaling down and are trying to survive downsizing, it might not be enough as your customers have been staying away in record numbers.
While the entire situation is entirely out of your control, there are some things you can do to make sure your business survives the economic repercussions of the shutdown. Keep in mind that some of these suggestions might be painful, but at this point, you are not only fighting for the lives of you and your family, but you are fighting to protect your livelihood. As such, here are some suggestions on how small businesses can survive the shutdown.
Cash is King
According to the JP Morgan Institute, the average small business has 27 days of cash on hand. Keep in mind this is the “average,” and even in good times, many small businesses operate with little more than a day or two of cash on hand at any time. Couple this with “best case” scenarios that don’t see much of the country reopening until early- or mid-May, and you have a recipe for disaster for most small businesses.
Even if you have been ordered to stay home, you can’t just sit back and let this happen for you. You need to cut your expenses now. Cancel all subscriptions that you aren’t currently using. Consider reducing headcount, even though this can be painful, you might not have a choice if you don’t have access to the money to keep them employed.
Also, talk to your landlord and work out a deal to furlough rent payments – possibly pro-rating the back due rent to your current rent when you reopen. If this doesn’t work, then consider canceling your lease altogether. Keep in mind that real estate prices will be significantly lower in May or June, so it might make sense to pull back completely and then reopen in a new location when the time is right.
Lastly, look at what invoices you have open with suppliers, and work out a plan to pay them when it makes sense. If you have undelivered orders, consider canceling them now or working out how to pay for the goods when they arrive.
Remember, cash is king, and your priority is to conserve your money.
Looking for Help
While the government has rushed programs to help small businesses, you can also seek disaster loans from the Small Business Administration or look to private partners for help. Facebook has announced a fund to provide marketing support free of charge to small businesses, and the CEO of Twitter and Square has donated nearly $1 billion to help small businesses across the country.
The key is to search out all available options, including grants, loans, and in-kind services, as getting a few of these can be the difference-maker when it comes to securing the future of your business.
Try to Keep Operating
Any sales, no matter how small, can help to keep your business afloat. If you have a restaurant, you could consider instituting a to-go menu or making deliveries. Other companies might be able to continue shipping their products – for example, sales of shirts have been spiking as people only need to dress from the waist up.
If you are in the non-profit or the union space, then you might look at ways to set up remote work teams, and you could even use items such as union stickers to help spread your message during a time when gatherings are not possible.
As mentioned, you want to find ways to keep your business operating no matter what. One positive of this approach is that you will find ways to make your business more efficient when things return to normal. Doing so now will help you to reduce costs while keeping the motor running and should help to save you money in the future.
Experiment and Invest
With the future of your business at stake, now is not the time to sit back. Instead, you need to experiment and invest in your industry. For example, now is the time to run small marketing experiments to see what works and then try to maximize the return for your business.
In terms of investment, you don’t want to go out and buy new machinery, but you want to make small investments that will not only help you to keep the lights on today but will position you to bounce back when things get going again.
We are living in unprecedented times, and the way to survive is to remember that cash is king, that help is out there, that you need to keep operating, and that you can use the crisis to experiment and invest in your future.