The World Health Organization (WHO) declared COVID-19 a global pandemic. This has lead to a very uncertain world where governments have advised their citizens to stay at home and practice social distancing when they have to go out for essential supplies. It has devastated some small businesses. Some have adapted and others have shut down.
So which types of businesses have suffered the biggest impact? In the United States, there was a survey conducted of over 500 businesses by the Small and Medium Business Group (SMB). The survey aimed to identify the businesses most affected by the coronavirus and also looked at what changes would be necessary to stimulate the recovery of the economy.
Businesses most Impacted by COVID-19
There is no doubt that the coronavirus pandemic has impacted many different types of small businesses. But the survey revealed that the sectors most affected were:
- Personal Service
It also found that the smaller the business the harder the impact was on them, with businesses that employed less than 20 people hit the hardest. The main reason for this is likely to be that these smaller companies tend to have insufficient capital reserves and cash flow to deal with a sustained lack of business.
The smaller businesses in the 3 worst affected areas had to lay off workers or significantly reduce their hours just to stay afloat. They also had to stop using contractors for work that they would normally outsource.
For some of these businesses, there was a chance to serve their markets differently. They had to change the way they operated so that they could serve a market that was staying at home instead of going out.
But this was not possible for all of the affected businesses, particularly those in the personal services sector such as:
- Dental practices
- Medical practices
- Handyman businesses
- Repair and home improvement contractors
- Hair salons
In the retail sector, businesses had to look at new ways to generate revenue. Instead of relying on “in store” traffic like they had always done, they needed to change to an online ordering process. They revamped their websites and increased their presence on social platforms such as Facebook and Instagram.
Adapting to a New Normal
At the time of writing this post, the COVID-19 pandemic was still claiming many victims. But at some point, there will be an easing and things will return to some kind of “normal”. People are not going to instantly return to what they were doing before. This new normal will require businesses to change their approach.
A small business that was used to conducting business on a face to face basis will now need to use technology such as Zoom video conferencing to meet with their customers. People will be reluctant to visit the offices of their financial planner or their lawyer for example.
You can speculate the same for internal meetings with employees. There will be a major shift towards employees working from home and all internal meetings will take place using a video conferencing solution. This is already happening and businesses are realizing that this is a cost-effective way to stay in touch.
The Work from Home Movement
A lot of businesses both large and small have seen the benefits of allowing their employees to work from home during the coronavirus pandemic. It is a good solution for both companies and their employees. Employees that work from home tend to be more productive than before as they do not have to commute to an office.
For a small business, this offers them the opportunity to save on office space and recoup some of the losses that they have experienced during the pandemic. The main areas of expenditure for employees where companies can save when they work from home include:
- Retail space or office space
- The purchase of office supplies
- Capital equipment expenditure
The trick here is to ensure that the productivity levels of employees that work from home remain high. Businesses need to find a new way of managing people that are working from home. Setting daily or weekly targets with video conferencing “check-ins” is something to consider.
What is required for Small Businesses to recover from the Impact of COVID-19?
There are several things that small businesses can do right now and in the future to recover from the impact of the coronavirus pandemic. In the SMB survey, participants stated that they would be investing in the following:
- Computer hardware
- Computer software
- Enhanced Internet connectivity
Small businesses need to realize that they cannot just forget that the COVID-19 pandemic ever happened. There will be fundamental changes in the market and those businesses that survive and thrive will be the ones that accept the challenge head-on and adapt to a new way of conducting business.
The Digital Makeover
Small businesses now need to think about making the change from customers coming to them to the companies going to their customers. They need to look at adapting to a stronger online strategy and delivering their products to the homes of their customers rather than expecting them to visit their stores or offices.
A lot of small businesses had a website because they thought that it was important to have one. They never invested a lot of time, money, or effort into it. It was just something that they could tell their customers about with their business cards and other promotional materials.
Everyone expects a business to have a website these days. But with the coronavirus pandemic companies need to think about how they can revamp their websites so that they can survive and thrive in the “new normal”.
A website is pretty useless if nobody is visiting it. So the digital makeover needs to focus on driving visitor traffic. The content of small business websites needs to change as well. It is no longer and information portal about opening hours and a map of how to get there. Selling products and services online is the name of the game.
This is what small businesses need to consider for their digital makeover:
- How they can sell their products and services online
- Changing the content of their current website so that it is more appealing to visitors
- Ranking in search engines such as Google so it is easier for potential customers to find them
- Having a social presence on major platforms such as Facebook, Instagram, LinkedIn, etc
- Implementing an attractive affiliate program so that affiliates can promote their products and services for a commission
- Spending money on paid advertising to get the word out about their offers
- Using video conferencing tools such as Zoom to communicate with their customers and team members
This is by no means an exhaustive list. Although most small businesses understand that they need a digital makeover, a lot of them will be concerned that they do not have the required skills in house to implement the necessary changes.
The answer to this is to outsource specific tasks to freelancers that have the know-how and experience. Here are some examples of the services that freelancers can provide to businesses for their digital makeover:
- Content writing – high quality and engaging content is essential to attract visitors to your website.
- Copywriting – selling your products and services from your website needs persuasive copy
- Social media marketing – you need a unique approach to promoting your business on social media
- Search engine optimization (SEO) – this is required to provide the maximum chance of your website ranking for related keyword terms in search engines
- Video marketing – people prefer to watch videos than read a lot of text. You need a strategy for YouTube so that you can get targeted traffic from videos
- Email marketing – communicating with your existing customers and prospects via email is still an effective way to make more sales but you need to do it right for the best results
- Website design – if your website is looking old and tired then get a revamp and make it mobile-friendly
- Payment processing – you need a way to collect money for the sale of your products and services online. You will need a payment processor like PayPal and you will need to add payment buttons on your web pages
- Sales funnels – digital sales funnels will help to convert more customers and to persuade them to make more purchases when implemented correctly
If this seems overwhelming then you may not require all of these things. You need to determine what your online strategy is going to be and then identify the best way to connect with your market online. Use the search engines to find good advice on how to create an online strategy and the most effective way to implement it.
Be prepared to provide a lot of value with your online marketing strategy. You can give things of high value away to people to encourage them to join your email list for example. Some businesses are offering discounts for ordering online and this is a good move. Customers expect things to be cheaper if they order them online.
Are you in the right Business?
One of the advantages that a small business has over a large business is that they can adapt a lot easier and faster to market change. This can even go as far as evaluating if your current business is still viable during and after the coronavirus pandemic.
The first thing that we recommend you do is to take a good look at your current business plan. What was working fine before the coronavirus pandemic may not be sustainable during and after it?
One thing that you need to bear in mind here when you do this is that nobody has all of the answers which includes you. But help is at hand. If you operate a small business in the US, SCORE in association with the SBA (Small Business Administration) can provide you access to mentors who will be willing to discuss your business and offer you help and guidance moving forward.
They have remote mentoring services available and there are also so free webinars that you can attend that deal specifically with the coronavirus pandemic. Another important thing to do is to take a look at what your competitors are doing. How are they adapting to the pandemic and what changes are they making to their businesses?
Do all that you can to monitor relevant trends. There are tools available for this such as Google Trends. Look at these trends as opportunities for you to shift your focus and move in different directions if needed.
Identifying the strengths and weaknesses of your business is a good thing to do. Ask yourself what was working well before COVID-19 and what you need to do to change to profit from new market conditions.
If the worst happens and you just cannot see a way to continue with your current business then think about what you can do. This will be a painful exercise for you, but there is no point running a business that will continue to make a loss in the new normal.
Post Coronavirus Finances
Some businesses may require additional funding to make their businesses viable again after the COVID-19 pandemic. In the United States, the Economic Injury Disaster Loans scheme and the Paycheck Protection Program can certainly help. But this is really about short term funding and you may need more than this going forward.
Any government funding program is going to end at some point so you need to take a look at other sources of funding such as:
- Term loans for small businesses from online lenders, credit unions and banks
- Other loans
- Credit cards for business
- Business lines of credit
- Inventory financing
- Merchant cash advances
- Accounts receivable financing
- Equity finance
Each of these options has advantages and disadvantages and you need to do your homework here before making a final decision. In almost all cases you will need to provide some form of security. With equity financing, you will have to give part of your company away (shares).
You will need to develop a recovery plan that is credible to raise additional funding. If you are going for a digital makeover, for example, then be sure to itemize all of the costs that you will incur.
If you are a small business owner that has suffered greatly because of the coronavirus pandemic then use this as an opportunity to plan for the future. Nobody saw this coming and the truth is that nobody knows what the new normal will look like.
So you need to make a judgment call here. We would recommend that a digital makeover is a good move even if things do return close to normal. It will provide you with an effective way to market your business in the years to come.
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