With consumer spending forecast to slide down significantly because of the effects of COVID-19, small businesses will be expected to identify ways to mitigate economic impact.
There is no denying the fact that small businesses power every country’s economy. In the United States, they create approximately 2 million jobs annually, employing up to 47 percent of the entire workforce and contributing 44 percent of the United States’s gross domestic product.
Today, small businesses are facing inconceivable economic catastrophe as the world faces the greatest health challenge ever seen – the coronavirus pandemic. To weather the times, small businesses will be required to leverage smart organizational strategies and demonstrate true resilience.
Here are a few challenges that business owners must consider in today’s challenging times:
Collapsing Demand And Access To Liquidity
Consumer spending made up a whopping 70 percent of the United States economy and GDP was forecasted to drop by as much as 38 percent in Q2 of 2020 as demand for consumer products and business services crashed tremendously because of the global effects of COVID-19.
The current pandemic strikes a similar comparison to the previous economic crisis where approximately 1.8 million small businesses were thrown on the doors of insolvency with more liabilities than assets during the period between December 2008 and December 2010. In a report, the JP Morgan Chase Institute while analyzing nearly 600,000 small businesses concluded that the average small business today has about 27 days of operating cash reserves. The effects of a pandemic on retailers is quite evident across the globe.
Managing The Work Environment For Safety And Efficacy
Safe and healthful working conditions for working people are assured by the Occupational Safety and Health Act of 1970 (OSHA). OSHA authorizes enforcement of the standards that have been developed under the Act. It makes it necessary for businesses to offer each employee with a workplace that is free from recognized hazards that are possible of causing serious physical harm or even death.
Presently, a majority of businesses don’t have a solution in place to let their staff operate without human proximity. For instance, businesses in the manufacturing sector would be heavily vulnerable as most factory floors were not designed with efficient social distancing measures in mind.
Let us now shift our focus on how businesses can survive the global pandemic.
Smart Strategies To Keep Your Business Running:
1. Utilize Small Business Aid
The United States government in early March 2020 authorized the release of $7 billion in disaster relief loans for small businesses affected by COVID-19. This program by the Trump administration was initiated to assist businesses that were operating in states with emergency declarations to reach out for borrowing $2 million and repaying the balance over a period of three decades. A $480 billion relief plan was also approved by the Senate for including aid for small businesses.
The federal Paycheck Protection Program, the two-year advance with an interest rate of 1 percent, is another loan designed for mitigating the economic impact on businesses with 500 employees or less. It provides businesses the option of borrowing up to $10 million to continue paying salaries and other monetary compensation to their employees during the pandemic.
2. Renegotiate Debts And Contracts
Business owners should look at options such as requesting deferred rent payments or renegotiating refinancing loans and vendor contracts in difficult economic times to reduce financial liability as much as possible.
If possible, business owners must explore the idea of making a request to banks for temporarily deferring interest payments on outstanding debt. It is worthwhile to note here that small businesses still are liable by eviction law to be removed from their places of commerce as not all states in the United States of America have banned commercial evictions. Therefore, it is suggested that businesses must increase their liquidity by getting extended credit or applying for a government loan.
Entrepreneurs must make early and frequent attempts to negotiate on new and favorable terms on their financial obligations to ensure their business stays afloat.
3. Fine-Tune Your Marketing Message
In times of crisis, marketing should amplify. While many believe that consumers prefer not to hear from businesses, the truth is that this idea is simply not true. It may look surprising to you but 77 percent of consumers want to see advertisements that explain how the brand is offering value and being helpful in such challenging times.
It is important that you consistently and clearly communicate with your consumers. Find ways to educate consumers and assist them to attain their goals even if they cannot presently afford to buy your products and services. Considering that advertisement is down $20 billion globally in Q1 of 2020, fewer advertisers will compete for ad space and this means a huge level-playing field for small businesses to advertise for more visibility at a lower cost.
There is no denying the fact that surviving the challenges ahead will not be easy, but it will also be not impossible. Find out how Propel Guru is making a difference to thousands of businesses across the globe with its revolutionary lead generation, content marketing, social media optimization, and search engine optimization services.
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Experienced executive with an emphasis on efficiency, process, follow-through, collaboration, and delivering results. Proven ability to successfully manage individuals, groups, and businesses to reach goals. Highly organized with excellent written and verbal communication skills and adaptable to change. Adept at streamlining processes and procedures and able to wear many hats and juggle multiple priorities.