Surviving the extreme economic downturn caused by the COVID-19 pandemic is presenting a turbulent, but not impossible, road to financial recovery in the coming months and years. Based on the historical context of previous economic downturns, including The Great Depression, there are key components you can use to slow the bleeding, re-evaluate and re-organize your business, streamline your efforts and ultimately recover financially.
Below are tested tactics to help small to medium sized businesses navigate our current economic climate with the possibility to re-position for success.
Reach Out to Your Creditors and Your Customers/Client Base
Being proactive and contacting your business and personal creditors puts you ahead of the game. Do not hide. Express your current circumstances and inquire about options directly tied to COVID-19 and the CARES Act. Renegotiate your payments and payment schedule, if possible. Don’t be afraid to ask for late fees and other late payment or non-payment penalties to be waived. Also, communicate with your business’s customers or clients to collect money they owe you. Be prepared to offer considerable dispensations to your customer base, from waiving certain fees to accepting lower upfront payments to get cash flow coming in. If you are in imminent need of incoming revenue, accepting pennies on the dollar in exchange for upfront payments may be necessary and can help keep you afloat.
Regarding new business, focus on supporting your customers right now. If you can, evaluate where their pain points are and accommodate them in exchange for their continued business.
Partner with Complementary Businesses or Organizations
Seek out industries that are profitable in this economic climate and align yourself with those companies to maintain market share and generate revenue streams. Businesses with complementary products or services are a great option. Take advantage of the “we are all in this together” sentiment. Strategic partnerships may mean selling a part of your company or acquiring a percentage of another company. Another business may have the ability to infuse your business with much-needed capital in exchange for equity.
Partnership Categories
Joint Ventures – Joint ventures merge businesses within an industry, with the purpose of combining resources. This helps you streamline, combine assets and cut unnecessary costs.
Equity Investments – Private equity investors provide capital for equity in your business. A private equity investor may extend you a line of credit to help you survive a tumultuous economic climate. Equity investments are not paid back in the traditional sense, but they will dilute your ownership stake by a certain percentage, and sometimes significantly so. A good equity investor partnership will mean that the smaller ownership stake you do retain will be worth significantly more than the current stake you own in your business.
Acquisition – Being acquired by a company that has the capital to support your operation costs places a significant Band-Aid on a turbulent time. You will be able to continue operations without immediate profitability. The capital and improved infrastructure that comes with acquisition also allows you to continue with brand identity efforts, including continuing to roll out your marketing plan. Although that may be the last thing on your mind right now, advertising and marketing efforts are important to maintaining your business’s market share within your industry.
Take Advantage of Technology and Outsourced Service Providers
A lot of businesses are currently auditing the efficiency of their workforce and how work is done on a day-to-day basis. This presents business owners with a unique opportunity to become more efficient in their productivity, and, ultimately, more profitable through using freelancers and technology software programs.
Look to Future Business and Economic Trends
Anticipate a September 2020 bounce back within certain areas of the economy. The American economy will once again gain an upward trajectory, though it will look somewhat different than what we are accustomed to. Our collective indoctrination into virtual communication will remain strong, and this will be reflected in how we operate our business activities going forward. Employers who previously insisted on in-office work will be open to remote staff with more accommodation towards issues like sick leave and other health-related employee concerns.
Banks will also continue to loan money, but they will be more inclined to invest in ventures that support the growth and development of robotics, artificial intelligence and technology-related products and services. Certain up and coming trends to watch and take advantage of are artificial intelligence-based brand creation services, A.I. data building services, and written content consulting software to up your marketing game to name a few.
Aim to Serve Your Community
Whether you are a brick-and-mortar, locally-focused business or fully digital and serving a national or international clientele, know that while you are experiencing the economic downturn, so are your customers and potential customers. This means anticipating that potential customers will need to rebuild their own businesses and organizations as the COVID-19 crisis subsides in the coming months. How will they need your help as part of their rebuilding or pivoting towards the end of 2020 and into the first quarter of 2021, and how can your company or organization help their cause? If you work with a team, hold remote creative meetings to brainstorm how your business can play an integral role in helping your customers and potential customers rebuild their businesses. Then create an offshoot business plan and marketing plan to service that objective.
