From the start of the pandemic, it was clear COVID-19 would adversely impact small businesses, in many cases forcing entrepreneurs to close their doors for good.
Although many businesses are reopening, the pandemic is far from over. Here’s how to prepare in case your business is forced to close again during the second wave of COVID-19.
The COVID-19 pandemic has led to the permanent closure of an estimated 100,000 small businesses, and the statistics show the pandemic is far from over. While we’ve all waited eagerly for a post-pandemic world, it seems that the new normal has arrived.
While businesses have reopened, it has become clear the pandemic isn’t going to just go away. A second wave could take some right back to square one, so you need to have a small business disaster continuity plan in case of another coronavirus-related company shutdown.
New cases of COVID-19 are on the rise amidst a staggered reopening.
A recent Chamber of Commerce and MetLife survey found that most small business owners are looking ahead. Of those that closed their doors earlier this year because of the pandemic, 69% have reopened. Despite the modest economic recovery, 65% of these business owners are concerned they will have to close again due to a possible second wave of the novel coronavirus – many of them indicating that their second closure could be permanent. However, 31% of small business owners haven’t taken any steps to prepare for a second closure.
But the threat of a second wave is very real, so small business owners must prepare to navigate the second round of closures. To hope for the best does not mean neglecting to prepare for the worst.
In the first round of business closures, cash on hand became a determining factor in how long a business could survive. Adaptability and flexibility were also key, as many businesses pivoted to remain operational in a social distancing environment. While some of the measures below were already implemented by most businesses during the first company shutdown, preparing for a second shutdown could leave you better positioned to survive the pandemic for the long haul.
1. Build and save cash reserves
When cash flow is interrupted, your cash reserves are there to support your business. Many small businesses found they only had enough cash on hand to float two weeks of expenses during the first company shutdown. In anticipation of another wave of COVID-19 business closures, grow your cash reserves any way you can. They should hang on to that built-up cash reserve, and they should seek deferrals from landlords, banks and suppliers.
2. Cut extraneous expenses
Many small businesses are already operating as lean as possible out of necessity. However, if there is any “fat” left in the budget, now is the time to trim it. Also, develop a contingency plan for going into company shutdown mode. What does your weekly or monthly budget look like if you suspend operations? How much cash would you need to cover your weekly expenses in this scenario?
Prioritizing spending based on critical need is another way to keep cash on hand. Some business leaders are negotiating to stretch payables for as long as possible without alienating vendors, while others are running inventory down to minimum quantities. Because of the critical times, we are in, a business could also consider modifying employee incentives and bonus plans.
3. Apply for available relief funds
Just as many small businesses took advantage of relief measures like Small Business Disaster Loan and the Paycheck Protection Program, continue to look for available relief funds. If you believe you are eligible for a relief program, apply for it. Every dollar counts, especially if you need to enforce a second company shutdown.
4. Develop and grow new revenue streams
If your business was lucky enough to develop an alternative revenue stream during the pandemic, consider investing in the growth of that new direction. For others who have not yet found an alternative source of income, it’s time to think creatively. What do your customers need right now, and how could you fill that need? How does this dovetail with your existing products and services? Your brand already has an audience; you just need to pivot to meet them where they are right now.
Many companies have found new revenue streams, including online sales. For restaurants and other retailers, it was switching to takeout and/or curbside point of sales. Perfecting these sales processes in anticipation of another closure is prudent. Be creative and think outside the box to find new ways to bring in revenue.
5. Maintain remote work capabilities
Remote work became a hallmark of the pandemic for businesses. For those that could remain operational at a distance, this has been a major benefit. If your business shifted to a remote-first approach to work during the pandemic, consider making those policies permanent. If your shift to remote work was fraught with challenges, assess what went wrong and try to improve upon those mistakes.
Most businesses experienced some form of the shift to online and remote operations during the first weeks and months of the pandemic. The time is now to evaluate what worked and what you need to improve in terms of online business and remote work. Put those plans and systems in place now. That is an investment that may very well make the difference between maintaining continuity of operations or shutting down completely.
6. Communicate with your employees and customers
Not only is it important for your business to keep everyone informed, but your customers and employees are looking to your brand for support at an uncertain and difficult time. Offer that support in a direct and easily understood way.
All businesses, regardless of size, should have a disaster and business continuity plan in place, along with a crisis team that is ready to put that plan into action. The most important aspect of making all of this happen effectively is communication. Businesses must plan to communicate often with their employees and their customers regularly.
Whatever your unique situation, it is critical to developing a contingency plan. Even if second-wave business closures don’t materialize in your state, you will be well-positioned for any other unforeseen crises.
Prepare for future COVID-19 closures and other crises
If the COVID-19 pandemic has taught us one thing, it’s those small businesses must expect the unexpected; this preparation could be the difference between surviving and closing your business permanently.
Remember the old adage: “It’s better to have it and not need it than to need it and not have it.”
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