Besides being a pandemic, Covid-19 has also been like a global economic Tsunami.
Starting from China it has encompassed the whole world and has slammed the global economy terribly, including the USA.
The year 2020 is coming out to be a year of failed dreams and ideas as it has seen a colossal business crisis, and the most impacted are the small businesses.
Entrepreneurs are still struggling with business crisis management, and many are unable to figure out how to handle a business crisis.
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50+ Small Business Owners Share Advice on Dealing with COVID-19
Large companies have huge funds at their disposal and are better prepared to cope up with such a business crisis, but the biggest victims are small business owners.
Some are also trying to start new businesses from home with online marketplaces. This guide focuses on business tips for small business owners and to tell them how to handle a business crisis.
However, before that let’s take a deeper look into what is a business crisis.
What is a Business Crisis?
When any unexpected problem puts the stability of a company at risk, it’s referred to as a business crisis.
If left unaddressed, it can cause permanent failure to the business. There are basically three elements that need to be identified.
- The problem poses an imminent threat to the company
- There must be an element of shock or surprise
- Due to severe threat and unexpectedness, the situation will call for quick and effective decisions
Knowing all three elements are important because if they are identified with a particular situation it would mean that you should be prepared for business and crisis management.
Some crises can be avoided if identified soon enough, but the business crisis caused due to a pandemic Covid-19 cannot.
In this case, all you can do is take some steps for your business crisis management and do some damage control.
Business Tips for Small Business Owners To Manage a Crisis
#1 Negotiate With Lenders
This is a chaotic situation and something that can make it even worse if businesses have to clear loans taken from lenders. Have a conversation with your lenders and try to defer these payments.
It’s understandable that even they would need their money in these difficult times, but chances are that they could be in a better financial position than your company.
Even if not all, at least a few of the lenders would agree to collect their money from you at a later stage when things normalize.
Since you might be out of business or at least not in full capacity of your business, any help from your lenders could support you.
Besides that, even the government keeps coming out with policies to make it easier for small businesses during such times. So make sure you’re updated with these and are taking full advantage when required.
#2 Help People Get Back to Normalcy
Most of the world is in lockdown, and people are finding it really difficult to cope with it. They are unable to go to the movies, eat at their favorite restaurants, or even visit their nearby malls for shopping.
If you can find a way to help them with these testing times, not only will your company be up and running, but also build great brand value.
If you’re able to satisfy any of the people’s needs during this challenging phase, it could do great for your brand loyalty.
For instance, many food delivery apps started delivering groceries and essential items to people as well. For any business’ growth, customer service is key, now more than ever.
#3 Employees Above Everything Else
Any business or company is nothing without its employees. They coexist for each other, and in times like these, a business must prioritize the well-being of their greatest asset i.e. their employees.
To help them deal with a pandemic like this, find new ways of working arrangements that comply with the labor laws in your country and also don’t risk their safety.
For instance, if you can find out ways to execute your regular business from a distance, you can simply allow working from home to all employees, so that your company also doesn’t lose out on work.
On the other hand, if it’s tough for you to execute all of your regular activities in that way, you can at least utilize this time to carry out other work activities, like building client and customer databases.
#4 Repair Broken Links in the Supply Chain
Most of the companies are experiencing a significant disruption in their operations and will be facing that most of this year.
One of the most affected functionalities of the business is the supply chain.
To deal with broken supply chains, companies need to be in regular contact with their suppliers regarding their capability to deliver products and work out recovery plans.
It could also be time you start considering alternative supply chain options.
#5 Discounts
When the business crisis is due to a pandemic like Covid-19, not only are businesses suffering but so are customers. Many people are out of work, or working for much lesser pay, and facing a cash crunch.
Managing expenses is getting tougher for them more than ever, and even lifestyle has become about survival for them.
So to keep surviving they will need to reduce their expenses, and for you to keep surviving you will need to reduce prices.
By providing discounts not only will you be able to survive the business crisis temporarily but also build brand loyalty in the long run.
#6 Prepare for the Unexpected Legal Challenges
On regular days it’s usually easier to tackle legal challenges, but legal issues could really be a hassle during a business crisis. Business crisis management calls for better preparedness for unforeseen legal challenges.
As a company, you need to conduct a risk assessment, and accordingly identify preventive measures, manage customer-supplier contract disputes that might occur due to the economic impacts of supply disruptions.
In fact, it’s also advisable to be prepared with the force majeure clause, whenever required. Communicate with relevant stakeholders only after consultation with your legal team and understanding properly about potential liabilities.
#7 Cut down Expenses
One of the most important tips for small business owners is to cut down on expenses. If you’re still not sure about how to handle a business crisis, one of the most effective ways is to revise your budget to fit the current scenario.
Run stress-tests on financial plans for multiple scenarios to analyze the potential impact on financial performance, and assess how long it could continue. If the impact seems material and former budget assumptions not so relevant, immediately revise them.
Reduce your operating requirements, including key dependencies of vendors, workforce, location, and technology. You can also slow down or curtail all non-essential expenses.
Final Thoughts
The topmost priority for businesses and governments during a business crisis like Covid-19 is the well being of the people.
With a well-designed business and crisis management plan, businesses can contribute a lot to society and even survive themselves.
We’re in the middle of a very tough phase, and everything might seem really tough.
You can also consider building your store during this pandemic. Besides, we’ve curated this guide with business tips for small business owners so that even if not flourish, they’re able to deal with and survive this business crisis.
