Five Priorities For Small Business Weathering The Coronavirus Crisis
DARTMOUTH – Like many in the consulting sector, Dartmouth’s StrategyUp recently offered a free webinar to help small businesses get through the impact of the COVID-19 pandemic.
Founder Marc Zirka, who has more than a decade of experience in multinationals across four continents, said his expectation is in line with McKinsey & Co’s estimate that economic recovery will only come in Q2 2021.
If things go back to normal in the next month or two, it will take less time to recover. But businesses should “act now” to put together a strategy, and analyze their strengths, weaknesses and opportunities.
“Not all businesses can survive by just providing services online,” he said.
Here are the five priorities small businesses should focus on:
1. Health and safety
“Look how important this period is for any business owner to be able to have have clear minds, to be healthy, to have people around them that they can count on, also with clear minds, so that they can take all the right decisions and they can support each other,” he said.
If the leadership team and key employees fall sick, even if a business has a good plan in place to get it through the storm, they won’t be able to execute it.
2. Employees and customers
The businesses that will survive the crisis and do better after are the ones whose employees will go the extra mile for, and whose customers will show strong loyalty, Zirka said.
“We need to treat everybody with care, respect, empathy and compassion,” he said. “After this crisis, doing business will not go back to the way we were doing business before. Everybody will remember how they were treated during this period. And everyone is going to re-assess their alliances.”
It’s important to be flexible, over-communicate and be transparent, he said. For example, businesses can lay out what steps are being taken to maintain social distancing and hygiene to reassure customers.
“The more honest and transparent you are, the higher chances you have to have consumers sticking to you,” he said.
3. Cashflow
Even if there are government programs that can help support cashflow, “you have to preserve your cash and spend on the strict minimum,” Zirka said.
He said businesses should also consider that consumers will likely take time to return to their regular spending habits after the crisis. Expensive and non-essential products will see reduced demand.
“The consumers have a much slower purchasing power for a certain period until things go back, employees go back to their jobs and start earning salaries…but we know unemployment rate is going to shoot up,” he said.
“This is going to create a psychological barrier where you’re conditioning the individual for a period of time to save and to manage the cash and the money which they have, or they don’t have yet, in a very tight manner,” he said. “Then all of a sudden ask them to spend the way they were spending before. It won’t happen that fast.”
4. Re-assess your alliances
Business should watch which suppliers are taking care of them as customers at this time, and diversify their supply chains, Zirka said. In addition, they should look at local partnerships.
“Purchase local, even from your main competitor,” he said. “If you help your competitor to survive and you survive, then we’re going to have a stronger community.”
Partnerships with other local businesses can also help in consolidations that may be necessary to keep costs low. “Reduce fixed costs by having economies of scale,” he said.
For small businesses, that could mean the merger of two pizza restaurants, or the formation of peer groups or business associations to consolidate purchasing or IT support so they can pay less for bulk prices.
5. Believe in yourself
“We need to believe in ourselves. If we were successful businesses before the crisis and we knew how to manage our businesses, I am sure that we’ll get out of this crisis successfully. However, we need to take the right measures, and we need to act fast,” he said.
He urges business leaders to surround themselves with positive attitude, whether that’s through joining peer or support groups, or by reaching out to mentors.