How Have Small Businesses Been Impacted During COVID-19?
With the pandemic impacting most industries, it’s challenging to identify what types of businesses would feel the most negative effects. From restaurants and dining to retail stores and service providers—business owners were left without a choice and had to react quickly. Unfortunately, as businesses shut down, employee layoffs were next on the list—commonly without enough warning or a financial plan in place. This is not necessarily the fault of business owners, as it could not have been anticipated. However, it highlights the importance of being proactive and taking security measures seriously for the future.
With businesses being closed temporarily, there was really no time to formulate an effective strategy to keep employees and adapt to meet the needs of individuals living in quarantine. Without money coming in, the financial impacts quickly hit hard. This left owners with no choice but to lay off their employees and close their store(s). Many small businesses do not have the financial resources to reopen or hire employees back. There will be too much debt accumulated to catch up. Also, there might be no way for businesses to profit with new rules and regulations.
What Deems a Business Essential?
Although still confusing, the government has deemed certain industries and businesses essential services; therefore, they need to remain operational during a global pandemic. Most business owners would likely support a case about why their business should be considered essential. Still, the reality is that many were not able to remain open. Fortunately, a consensus narrowed down the essential life-sustaining services that included supermarkets, food manufacturers, pharmacies, banks, gas stations, automobile shops, power plants, shelters, transportation hubs, law enforcement, and more.
Of course, with that list came controversy and grey areas whether certain businesses should be considered essential. Most of these businesses had retail fronts where customers have been able to visit during the pandemic. These included businesses like hardware stores, office supply stores, liquor stores, and cannabis distribution centers. These industries were determined to have more harmful or negative impacts if their products and services were not available.
How Can Businesses Adapt to the “New Normal”?
It’s hard to say if businesses will fully adapt to this “new normal” anytime soon. Still, there are ways to begin marketing their product or service offerings to reach as many customers as possible, if not even more than before. This might require business owners to develop new strategies and company goals. Although this requires time, creativity, and additional bandwidth, if a business intends to remain open and make a profit, there have to be new ideas.
Leveraging technology and digital solutions, many businesses have transitioned to a remote operation, saving them money in certain areas. With technology at the forefront of this pandemic, certain businesses that would have normally closed were able to adapt and stay open. For example, retail businesses had to find ways to market and influence their products to make online sales since their store locations were forced to close. Companies that offered one-on-one services have adapted their business structure, offering other incentives for their customers to continue to support them and receive a new product or service.
How Can Small Business Owners Secure Their Future Amidst Uncertainty?
It’s more critical than ever for business owners to be proactive and protect their own future, along with the business. As an owner, your employees and business partners rely on you in more ways than one. It would be costly to replace your contribution day in and day out. It would be in your best interest to protect your partners, family, and employees by setting up a personal life insurance policy in the case of your unexpected passing.
Although you might be in good standing health, preparation is key, especially as a business owner. Without the proper coverage, your financial responsibilities could fall upon your business partner or family member. They will then have to take on that burden during a difficult time.
It’s also recommended that you look into key-person insurance, a specific type of company-owned life insurance option that can keep your business operating even if you or an integral team member were to pass away. In this case, your business pays the insurance premiums and is the beneficiary of the life insurance policy. As the business owner, if you passed away suddenly, the insurance company will then pay the death benefit to the business. There are many reasons why a personal life insurance policy is beneficial as a business owner during trying times. You can continue to educate yourself and your business partners by reviewing a guide to business insurance and learning about your situation’s best options.
What Are Some Benefits of Getting a Business Loan During the COVID-19 Pandemic?
In some cases, the best—or only—way to secure your future will be with a loan.
Obtaining a business loan during the coronavirus pandemic can help your business in several ways. It can provide immediate financial relief, a useful tax shield, and the ability for your business to expand its inventory and operations to adapt to the needs of a changing world.
The three most notable benefits of taking out a business loan during the pandemic are:
1. Stabilized Business Operations
COVID-19 has hindered the operational abilities of millions of businesses around the world. Many have experienced reduced income streams due to the pandemic, which has negatively impacted their operational stability. You can stabilize your small business’ operations and help get its most important processes back on track by securing a loan.
A loan will enable you to buy the raw materials and finished products and maintain the inventory you need to stay in business. Additionally, it can reduce bottlenecks and operational delays. Your loan can also help work capital requirements, such as clearing pending bills and covering unexpected operational expenses that need immediate attention, even when cash flow is low.
2. Opportunities to Expand
COVID-19 has brought about many challenges for business owners, but it has also created unique economic opportunities. Your business may be poised to take advantage of these opportunities, but it may need additional funding to expand during hard financial times. A loan can help you expand your business and update your inventory to meet the increased demand for sanitation products, grocery staples, medical wares, personal protective equipment, and other much-needed items during the pandemic.
Taking out a business loan can keep your shelves stocked if you anticipate a busy period of the year and are low on inventory. A short-term loan can address many stock level issues by granting you the funds you need to provide your customers with a variety of quality products they’ve come to expect from your enterprise.
Your business loan could also offer you the funds needed to open an online store and convert your physical business into a digital one. It could enable you to hire more staff, expand your office space, set up a remote work network, or invest in the equipment you need to expand or streamline your supply chain.
3. Personal Financial Protection
If you’re the owner of a small business, you may already be aware that it can be challenging to separate your personal finances from those of your business. The onset of COVID-19 has been tempting or forcing many entrepreneurs to pay out of pocket to fund their businesses.
This can be a hazardous decision for your personal and business credit, so it’s advisable to avoid keeping your business afloat with personal capital if you can. Obtaining a loan can help by allowing you to keep personal and business bank accounts separate and in good standing. By correctly calculating how much money you need to borrow to stay afloat, you can continue to operate your company independently for the foreseeable future.
Furthermore, a business loan will also offer tax benefits to your business. You can categorize your interest payments as expenses, which means you can use them as a tax shield.
What Can Business Owners Do to Support Their Employees?
Should you be one of the fortunate small business owners able to remain open or have recently reopened, you might be wondering how you can provide support to your employees. These times are trivial, and the guidance, leadership, and support you give your employees will most likely come back to you. Remember, the small things are important right now, and they have the ability to make or break your business’s future.
If you are looking for ways to connect with your employees personally and professionally, consider sending them a survey to gather more information about their lives over the last few months. Having a more in-depth understanding of your employees’ needs during times like these can help you provide assistance or offer resources. This might look like helping them coordinate child care, finding ways to optimize their benefits, or provide remote learning opportunities to further their knowledge and experience. What you put into your employee programs will show in their performance, helping your business in the long run. Remember, valued employees will more likely be dedicated, hardworking employees.
How Do You Maintain a Growth Mindset During a Pandemic?
When times are tough and your business’s future is unclear, it’s easy to be negative. If you have been facing stress and financial turmoil like most businesses, now is not the time to give in. Oftentimes, with great crises comes great change in your life personally or professionally. Finding ways to educate yourself on effective leadership and discovering growth potential in this time is truly key.
Entrepreneurs and business owners will always face some level of adversity throughout their careers. It’s what you do during those times that will either propel you forward or cause you to crash and burn. Use this time to get to know your team, their strengths, and their background. Utilize what they bring to the table and help inspire them. Also, get closer to your audience and customers—figure out their needs and concerns during this time to uncover solutions. Perspective can change the game for you as a business owner and the future of your business.