The novel coronavirus pandemic has forced small retailers and restaurants around the world to temporarily close their doors or severely limit the scope of their business. The businesses that have remained open are now contending with a whole new set of health-focused regulations.
It’s a stressful time for small business owners and employees, to say the least — and perhaps especially so for retailers and restaurateurs.
Many employers are wondering whether they’ll be able to make ends meet under these new restrictions — and possibly for the long-term throughout a pandemic-related recession.
However, there are plenty of tactics that small business owners can use to protect themselves against sudden stoppages and slowdowns in their customer flow and revenue. Although this pandemic is unprecedented in many ways, small business owners have been facing sudden obstacles and hurdles to their businesses as long as they’ve been around.
The key is to expect downturns, recessions, and business interruptions and have a plan to respond when they do arise. Here are a few things small business owners can do to build their resiliency.
Build Up Your Cash Reserve
This McKinsey article analyzed which types of retail businesses were best able to weather the Great Recession of 2007-2009 and noted that the companies that did best started saving more at the first sign of a downturn: “Resilience unlocked more cash, and sooner, than other retailers. Having this war chest enabled them to navigate the downturn successfully.”
Having a cash reserve is a smart move for any type of business. Of course, it can prove to be essential in the face of emergencies, but even if it never becomes necessary, it still provides a sense of peace of mind that can enable entrepreneurs to operate more successfully.
Although it may be a little late in this pandemic to start building up a big cash reserve, in general, good advice is to save about 6 to 12 months of your business expenses. You can keep the money in an account that prioritizes easy access over financial gains in the form of interest.
Quoted in this American Express article, entrepreneurial studies expert Susan Scherreik notes that some business owners set up several cash reserve accounts, each devoted to a particular situation, such as unexpected illness or even vacation.
“Bank savings accounts, money market accounts, CDs, and low-risk, short-term, high-quality municipal bond funds are good choices for savings that may have to be tapped immediately,” Scherreik says.
In order to increase available cash, other tactics that so-called “resilience” studied in the article used were divesting of nonessential resources to increase cash flow prior to a recession and decreasing as much overhead as possible to increase cash flow.
Another best practice for keeping your cash flow as healthy as possible is: Keep a close eye on your receivables. In this CNBC column, entrepreneur Brian Moran shares a few lessons he learned from losing a small business during “The Great Recession.”
He sums it up this way: “If you don’t collect receivables in a timely manner, you run the risk of “net 30” becoming “net 60″ or even “net … whenever I can get a check from the insurance company.”
Stay Aware of New Opportunities in the Changing Market
Recessions are generally seen as business obstacles, and they can indeed be devastating to small businesses.
However, as the market changes, new and exciting opportunities can also come your way — and leveraging them can give you serious advantages both during and after a recession.
For example, assets such as new property or equipment may become much more affordable in a downturn. You may also find that the changing market landscape has opened up your product or service to valuable new markets.
In the case of the coronavirus pandemic, for example, many restaurateurs and retailers are seizing the opportunity to move their businesses online for the first time, or make major improvements to online sales and delivery infrastructure. This has allowed them to expand the number of people they can sell to, reaching audiences outside their immediate local area and even throughout the world.
Another example of seizing new market opportunities: Some restaurants have created new products specifically for people spending more time at home with families, such as build-your-own-pizza kits and cupcake decoration kits.
By investing in omnichannel sales tools and pivoting to provide products and services that better meet customer needs, these small business owners may be able to enjoy a diversified income stream for years to come.
Continue to Invest in Marketing And Advertising
An intuitive sense might suggest that marketing and advertising expenses should also be cut along with the other non-essential expenses as a recession approaches.
However, as long as you keep a clear grasp on what your customers need and continue to adapt your services to meet those needs, marketing and advertising can be the very thing that keeps your business afloat during difficult times.
This Harvard Business Review review article suggests taking “a scalpel rather than a cleaver” to the marketing budget, focusing on marketing tactics that are easier to measure.
In a downturn, you’ll need to keep the long-term position of your brand in mind while also adapting to short-term needs to boost sales. For example, a luxury brand shouldn’t try to transform itself into a commodity in the face of general stress about the economy. But they can still develop campaigns that reflect their customers’ changing budgets.
How Cloudscape Can Help
Our team at Cloudscape is standing by to help our clients during these difficult times for your business. Please don’t hesitate to reach out to us for support. You can use this form to submit a request, or email us at firstname.lastname@example.org.
We are offering hourly packages at a reduced rate to support your business and help your team through technical matters. We are also offering a complimentary 14-day care package subscription for all of our customers’ support needs during this time.
This is a challenging time for small businesses, but it also presents a great opportunity to promote your business online. Today’s modern cloud-based software makes it easier than ever to sell via a web store and other online channels, such as through social media. This is especially helpful during times when your customers may be unable to visit your store in person.
This is a challenging time for small businesses, but it also presents a great opportunity to promote your business online.
If you’re considering upgrading your software programs, we would love to help. We work with restaurant and store owners to find and implement the combinations of cloud-based software that best fit their businesses. Simply fill in this support form and we will be in touch ASAP.