Coronavirus: Tips and Resources for Small Businesses During the COVID-19 Pandemic
The novel coronavirus, COVID-19, is presenting a serious crisis for small businesses around the world. Small businesses must monitor their cash flow, customer retention, and employee satisfaction carefully even when business is good, and the coronavirus pandemic puts stress on every aspect of owning and running a business.
In the United States, government mandates for social distancing, closures of non-essential businesses and a struggling economy are pushing businesses to the breaking point. This is a stressful time for small business owners, but there are a few ways to reduce economic injury and emerge from the crisis with a stronger business.
Manage Cash Flow
In some areas of the United States, local and state governments require all non-essential businesses to close, particularly in large cities experiencing outbreaks. Even where non-essential businesses can remain open, the general public is encouraged to stay home as much as possible to slow the spread of the coronavirus outbreak. This can put a major strain on businesses with tight margins, such as restaurants and beauty salons. However, there are ways to manage your cash flow through the coronavirus outbreak.
1. Get Creative to Increase Your Sales
Dealing with new legal obligations to protect public health and customers who are staying at home can force you to come up with new ways to do business. Here are some ways to provide your product or service without close interaction and increase your cash flow.
Restaurants: Provide takeout and delivery, even if you have never provided takeout or delivery before. Some states have also loosened liquor laws, allowing restaurants and bars to sell alcohol to-go with a food purchase.
Beauty Salons: While you may not be able to see customers in your salon, mix up hair color to deliver to your regular customers, host a virtual nail party online or deliver a weekly e-newsletter with tips for at-home beauty.
Clothing or Retail Shops: List items on your website for people to order by phone or online and make daily or weekly deliveries. Try to advertise “work from home” attire, home office supplies or crafts for bored kids.
2. Reduce Overhead Costs
Overhead costs are expenses that keep your business running every day, such as rent and employee salaries. If you cannot increase sales, reducing your overhead is another way to get more cash in your bank account during an unexpected downturn in revenue. For example, if no one is using your workspace, you can reduce temperature control settings and suspend your internet or cable service. While it may be necessary to reduce your staff to save your business, it is important to consider the risk of losing important employees against the cost savings.
3. Take Advantage of SBA Disaster Relief Loans
The federal government knows that small businesses are experiencing hardship right now. As part of the CARES Act, the Congressional Small Business Task Force unveiled a $367B Emergency Coronavirus Relief Package including Paycheck Protection Program loans which have low rates and limited requirements so businesses in all 50 states and territories can apply for COVID-19 relief funding. Businesses can use the money from these relief loans to pay debts, payroll, employee benefits, accounts payable and more. Businesses can also apply for an Economic Injury Disaster Loan from the Small Business Administration (SBA). These EIDLs have low-interest rates and are designed to help businesses to get back on their feet, but have more qualifying criteria and longer approval periods.
To help all businesses and individuals, the federal government has extended the deadline for paying individual taxes, including estimated self-employment taxes, from April 15 to July 15.
Finally, the Express Bridge Loan Pilot Program allows businesses with an existing SBA relationship to access more funding with less paperwork. These programs can provide significant help with cash flow during the pandemic.
4. Apply for a Business Loan or Financing
There are also other business financing and small business loan options to increase access to cash in the immediate future. There are a few financing options with flexible repayment terms that can provide capital upfront.
Line of Credit: Securing a line of credit can be a great option to stabilize cash flow and maintain business continuity if you expect that business will slow down or that you will need a serious capital injection to weather the storm (i.e. pivoting from dine-in to takeout). A line of credit is ideal because you only have to pay back the money you actually use, plus interest. When it is hard to predict when a business will resume as usual, this can be the best financing option.
Merchant Cash Advance (MCA): Merchant cash advances can also be a great solution as remittances grow and shrink with revenue, rather than needing to keep up with the fixed payments of a term loan. A merchant cash advance can allow you to make investments right away to help you provide your products and services during or after the pandemic.
Care For Employees
Employees are vital to small business operations. You know it is important to protect your employees, but exactly how to do that differs based on your location, legal obligations, and industry. Here are a few things to consider to keep employees safe and happy.
Work From Home
If it is possible for your business to go remote, that is the easiest way to protect your employees. It is likely worth the investment in extra time or technology services to help your employees stay healthy and keep your business functioning. Instituting work from home policies can also help employees to care for children who are home from school or sick family members.
Keep Employees Informed
If you are an essential business or are remaining open for business, keep your employees in the loop with staff meetings, emails or messaging platforms. It is especially important to communicate changes that directly impact employees, such as changes in hours of operation or job responsibilities.
Consider Paid Sick Leave
The last thing you want employees to do is to come to work sick or feel obligated to work while a family member has coronavirus. To ensure your employees stay home when they are sick, offer paid sick time. Even if you do not have paid sick leave, it may be a wise investment to keep your workforce safe and healthy.
Prepare for a Crisis
Though the vast majority of people recover from coronavirus, severe cases of COVID-19 can result in death. Your business should have a plan to respond to an employee’s death or the death of an employee’s family member. Similar to other potential business crises, it is best to prepare for the worst and hope for the best.
Compassionately Decide and Communicate Employment Changes
Unfortunately, you may need to lay off or furlough some or all of your employees to keep your business afloat during the COVID-19 pandemic. While it may seem easier or kinder to reduce hours and keep everyone employed, this can make it hard for employees to apply for unemployment. Be sure to consider what will be best for both your employees and your business.
Reassure Existing Customers
One of the most important things to do during the pandemic is reassuring your current customer base that you are operating in a safe manner. The last thing that you would want to do is alienate your customer base by failing to communicate with them. There are some best practices to keep your customers engaged during the health crisis.
1. Be Clear About Operations
If your customers show up to your business to find it unexpectedly closed or can’t find any information on your website, this could be enough to lose customers. Email customers to let them know what your business is doing, post on social media regularly, and update your Google My Business account.
2. Advertise Any New Services
If you are offering takeout or online ordering, let your customers (or potential customers) know through every possible medium (website, social media, email, local media, etc.). Both regulars and potential new customers can learn about your new services and take advantage while they are home.
3. Communicate Safety Measures
If your business is essential, or you are located in an area where non-essential businesses can remain open, it is important to inform your customers what you are doing to protect them from coronavirus. In particular, increase measures to improve sanitation and increase space between people. It is important to improve health and safety measures and to acknowledge the danger of the coronavirus.
Director, Marketing & Strategic Partnerships at Credibly