There’s no question we are in the midst of an economic crisis with the COVID-19 pandemic. A combination of forced shutdowns and reduced demand leaves small businesses in a terribly uncertain state with little idea when business-as-usual can possibly resume. Small companies and startups are generally doing the right thing and putting public health first, but decision-making is difficult in this downturn that’s like no other we’ve seen before.
You’ve surely received a lot of great business advice over the years—but not much of it is applicable right now, and these are not normal times. There are common small business mistakes—things you shouldn’t do in general. But we’re looking at a different set of rules in a downturn caused by a virus, and here are some business mistakes you really want to avoid during the COVID-19 slowdown that has no defined end.
1. Ignore New Sources of Credit
If your fundamentals were strong until coronavirus came along but now you’re wondering how to make it through the next few months, a small business loan might be the right answer. You can apply for a loan online and get capital in as little as 24 hours, or you can apply for a business line of credit or a business credit card. The Small Business Association (SBA) is also making SBA loans far more readily available during the COVID-19 slowdown.
2. Avoid Your Creditors
Every business is in a bad spot right now, and your creditors are going to be uniquely willing to make a deal if you reach out. Talk to your landlord about reducing the rent for a period—you can be sure their other tenants are having the same problem as you. Some of your other contracts may have an “out clause” for forced closures. Now is an unprecedented time when you can certainly stretch out some debt, and you might even be able to exchange goods and services for sums that you owe.
3. Miss Potential Insurance Benefits
And by “potential insurance benefits,” we mean “loopholes.” You may be covered with any “act of God” or “force majeure” clauses in your insurance policy. If your business is in a state that has declared a disaster or emergency, you have an even more credible claim to cite an “act of God” clause.
4. Stick with Unprofitable Aspects of Your Business
Now is not the time for “loss leaders” or losing money on a good or service you think can turn a profit down the road. Pare back on everything except your most profitable offerings. You can’t afford for your bottom line to be brought down any more than it already is, so save those costly expansions or new products for a brighter day.
5. Stick with the Same Inventory Volume
You can probably reduce some items from your inventory because they currently have weak demand or other goods that might involve extra costs to store or maintain. Review your inventory management procedures to make sure you’re only stocking your most cost-effective, lucrative items.
6. Count on Just Your Core Customers to Get You Through
Core customers are your most important clientele, and you certainly should check on them to see how they’re doing and to lend emotional support. But you have to recruit new customers, too. Go after your competitors’ customers, offer something different, better, or of higher value.
7. Ignore Possible New Revenue Streams
Could you sell more products if your customers could get it using a delivery service like Postmates? Can you sublease any of your space to another business? Can you arrange online sales or even simple meetups where customers can pick up items purchased in advance? Setting up an online sales platform can be quick and pay for itself, and prepayments and gift cards might also provide a strong short-term revenue boost.
8. Reduce Your Marketing Efforts
If you’re open for business in any capacity right now, you want people to know it. Buyers face limitations like never before in modern times and are looking for alternatives that you may be able to provide. Social media marketing may be particularly effective right now, with much of the country on stay-at-home orders. Popular media publications, tv stations, and radio are slashing prices on ads, yet media consumption is as high as ever. People are especially reliant on the latest news, and eyeballs that are hungry for information will also see your brand. You may want to consider highlighting particularly in-demand products.
9. Make Nonessential Purchases
For now, eliminate any business cost that is not essential. Big-ticket items, new equipment, expansion, or business travel are often great ideas, but for now, you should be focusing on just surviving the short-term slowdown.
10. Consider This ‘Down Time’ or ‘Dead Time’
You may have less foot traffic or even a forced closure right now, but don’t treat coronavirus time off like a snow day. Now is a great time to engage in staff training, pursue an accreditation program that may help your business, or catch up on taxes or bookkeeping. You can take measures during the slowdown that could produce fewer headaches or more revenue in the future.
The small business economy was strong prior to the COVID-19 outbreak, and containing the virus may return the economy to its previous state. If you can find ways to produce working capital in the near term, you can keep your business healthy while the country is on the mend.