Most small business owners in the U.S. are continuing to suffer the financial impact of the coronavirus pandemic. While many have been able to adapt to the needs of this new normal, tens of thousands of businesses, unable to recover their losses, have unfortunately been forced to close their doors for good.
A Yelp report revealed that by the end of August 31, 2020, 163,735 U.S. businesses had closed, citing that 60% of those closures were permanent. Businesses in the hospitality sector – restaurants, bars, and nightlife establishments – were among the hardest hit, with a whopping 32,109 companies shutting down their operations for the foreseeable future.
Surviving businesses still saw plummeting revenues but were able to slowly recover after pivoting to a different business model. Many restaurant owners shifted their strategies to focus on food deliveries, barber shops offered home services, brick and mortar locations moved their operations online, etc.
We still don’t know when this pandemic will end, or if another crisis of this magnitude will hit. It’s imperative for entrepreneurs to make decisions now that will protect today’s growing businesses and build financial resilience for the future.
Here are ways small business owners can be better prepared for a crisis with economic fallout:
1. Take advantage of cloud-based tools and solutions
A Gartner survey released in the first quarter of 2020 revealed that 91% of HR management in Asia Pacific were able to implement a work-from-home arrangement since the COVID-19 pandemic started. The biggest challenge, the survey showed, was the “lack of technology infrastructure and lack of comfort with the new ways of working.”
That being said, there is a loud cry for organizations to utilize cloud-based productivity and collaboration tools to address operational barriers.
In the wake of the crisis, teams worldwide have taken advantage of cloud solutions to help them scale better, meet customer demands in real time, communicate more seamlessly, and operate in a more secure fashion.
There are even cloud-based invoice processing tools that allow companies to reduce payment costs by 80%.
The early and continuous adoption of cloud or the migration thereof means connecting people, processes and technologies, which is critical in supporting the current work-from-home requirements and industry demands as a whole.
2. Protect the workforce’s mental health
It’s one thing to make the necessary adjustments to protect your employees’ physical health and keep them protected from contracting the coronavirus at work. But now more than ever, business owners need to prioritize their employee’s mental health as well.
An article published by the Washington Post in April of 2020, cited a poll conducted by the Kaiser Family Foundation that indicated 45% of American adults said the pandemic had affected their mental health, with 19% saying it was having a “major impact” on them. These numbers are staggering, but not surprising given the fallout of the pandemic – joblessness, social distancing or isolation all on top of the fear of getting sick or that your loved ones will fall ill.
Employers need to take this into consideration and make it an equal priority, particularly now, but as good practice moving forward. Scheduling one-on-one check-ins could provide employees with an opportunity to communicate struggles they may be enduring – work-related or personal – that may be effecting their ability to do their job.
In the event that any staff has to take time off due to work-related stress or injuries, employers can protect their businesses by taking out Workers’ Compensation insurance. It provides employees benefits to cover your injured or sick employees’ medical expenses. It can also help replace wages from lost work time.
3. Seek financial assistance
Lockdown measures had a drastic effect on businesses’ cash flows, which generally left small funds for re-opening efforts, creating new marketing campaigns, or paying for utilities.
Most SMEs who survived the tragic effects of COVID-19 had a high failure rate, making them notorious in the eyes of banking institutions. Loan application in general has become more stringent, but many smaller lending institutions have opened their doors to small businesses with growth potential.
To support post-pandemic growth, it has become more crucial for organizations to seek financial support, not just to get by, but to plan ahead. Getting $1,000 cash advances from lending institutions will go a long way in creating social media ads that attract new customers or reforming business operations, depending on what the company aims to focus on.
You do not want to get into a position where you cannot fund future business activities and have to look into business debt relief options. A Chapter 11 bankruptcy, Chapter 13 calculator, and Chapter 7 liquidation may be options if you do run out of cash, but it would be preferable to make sure your cash flow to continue business operations without debt relief.
This additional funding gives companies enough cushion to plan for revenue-generating strategies that will protect them in the event of a new crisis.