With the stock market plummeting and the world economy in the midst of its worst recession in decades, the COVID-19 pandemic is proving to be worse than the world had expected. Although forecasts vary, many health experts expect the coronavirus outbreak to subside in at least eight weeks, assuming that social distancing and other efforts to contain the spread are successful. It requires the targeted use of resources such as emergency preparedness, prevention and response, and effective management to recover from the economic impact of a public health crisis like COVID-19. Small businesses will get the worst hit from this pandemic that can scale back or close if consumers stay at home to curb the spread of coronavirus. They are trying to find ways to reduce risk and protect their employees. Here we present a list of strategies and steps that small businesses can take to survive during the coronavirus outbreak and adjust to the negative impacts of this epidemic.
Problems faced by small businesses:
According to a survey, average small business has only 27 days of reserve cash available. This is a grave situation because India will remain in the complete lockdown for 21 days, at least. So many small businesses will either be forced to close or will be running on minimal employees.
As you can see from the above chart, no small business can sustain a closure of more than a month. They will need interest-free loans and other cash reserves to pay their employees and keep their storefronts. After the closure of lockdowns across the city, consumers may then restore some of their spending habits. In a national survey done on small business owners, pretty interesting results came out. They were asked about the problems they face during the coronavirus outbreak. More than 50% believe that the world economy will fall into recession during the next 12 months.
What are the solutions?
No doubt, the government of India will provide necessary aid and relief funds to small businesses in order to restart them, but there are some steps that businesses can implement to be back on track.
- Move your business online
If you are a restaurant owner, take orders online. If you are in the construction business, launch your website. Connect with your clients online. The idea is straightforward. You don’t have to rely on cash or local markets. Setup different payment modes like Paytm, Google Pay, etc.
- Redesign and Rethink
Think about redesigning your products and production process to make them more efficient and cost-effective. This will help you in the long run in producing the items that consumers need, and also give you profits.
- Stay solvent
According to financial experts, if a small business remains solvent during this time, it is highly probable to avoid recession and recover as soon as possible. Insolvent companies will surely go bankrupt.
- Apply for the Small Business Administration loans
The Central government, as well as state governments, will provide aid packages to businesses who are in emergency status. Large companies and government agencies can give relief by merely paying outstanding bills now. So, apply for the loan and keep the solvency.
- Renegotiate terms of contracts and debt
This strategy applies to small businesses and freelancers as well. Jobs have shrunk, and people are not getting money during these times. So, business owners should ask for more time from the landlords to pay their rent. They could also ask banks to postpone interest payments on unpaid debt for a limited duration.
- Use the time productively
Make the most of your free time by thinking about developing any new services and procedures that you haven’t had time to do before. Galvanize your staff and help them feel productive and valued by engaging them in this process.
- Assess your business and operational risks
Review and take a closer look at all the operational aspects of your business. See if there is something that can be improved. Make a pre-start checklist to ensure that you’re ready to go as soon as the socio-economic situation allows.
- Communicate with your clients
During a crisis like this, trust becomes a huge issue. You never know if your old customers will remain your customers or not. So, communicate with them, reassure them, and even contribute a resolution if need be. You don’t want to lose your precious customers once everything returns to normal.
- Review your supply chain
Be in constant communication with your customers and suppliers. Assess the requirements and supply. Then decide what you can offer to consumers that will benefit them and make your business profitable.
- Ask for donation
There are many online platforms where you can ask for help and donation. People will donate money as per their ability. It mainly applies to businesses that are in writing, music, art, etc. Remember to set up different payment modes to accept money because people use different modes, and you don’t want to reject a donation just because you don’t accept online payment.
Small businesses are the very backbone of our societies around the world. It is a critical moment when each day matters. After all, if we lose these small businesses, our cities will look very different, and it will take a long time to get back the industries that we will have lost. So, follow these expert strategies and wait for the crisis to be over. Believe it; you can be back in business in no time.