Are you ready to compete as a post-COVID entrepreneur?
As of October 2020, COVID-19 has claimed over 200,000 lives in the United States and could soar to 300,000 by the end of the year and into next year.
Hundreds of suburban Chicago businesses have scaled back operations and laid off workers this year, and hundreds of thousands of small businesses nationally have closed their doors permanently. Congress has so far failed to extend financial relief to millions of small businesses so the layoffs and shutdowns will likely continue through the rest of the year.
But despite the failures we will eventually get through the COVID-19 crisis. The economy will recover, business will pick up and life will get back to some sort of "new" normal. Exactly what that new normal will look like for small businesses and entrepreneurs will depend on factors such as their industry, number of employees, the strength of the local economy, the local COVID-19 positivity rate and many more.
So how will small suburban businesses recover from COVID-19? They will need to adapt to the new normal with some new best practices. Here are a few:
Re-establish customer, supplier and vendor relationships
While small businesses depend on relationships with customers, suppliers and vendors, they typically rely more on these relationships because they have fewer staff and much less capital than larger businesses. Business relationships may have been damaged, necessitating the repair of these relationships or establishing new ones.
Small manufacturers and suppliers will need to rethink their product lines and distribution channels. Many of them will be forced out of the bigger retailers and will have to shift toward smaller, niche partners. This could benefit smaller businesses because they may achieve better margins, but it's more difficult to sell through hundreds of boutiques than working with giant chains.
Rethinking staffing, schedules and locations
The demands of the workplace will largely be shaped by two opposing factors: the push to expand the business footprint to accommodate more social distancing and the push to shrink the footprint to take advantage of more automation, more remote work and flexible hours.
Real estate is a major cost for many small businesses, but the market is likely to be in transition, with office vacancies on the rise. But small businesses will be hesitant to increase space, especially if they take time to rebuild their workforce or turn to automation or move toward remote work that relies on enhanced collaboration tools.
Anticipate less touch, more tech
Small businesses will embrace more and more technology, such as touchless payment systems, online contracts and signatures, video conferencing, and meeting and collaboration tools, as well as outsourced payroll and HR systems.
Reconnect with funding sources
Traditionally, during an economic downturn, banks tighten their lending criteria and small businesses get squeezed. The situation was exacerbated by the loss of community banks that were once the lifeblood for small local businesses. They were gobbled up by large banking concerns or simply folded.
Small businesses will need to reconnect with banks and other funding sources, and gradually rebuild their credit lines and credit ratings. This is almost always a painful process, since most banks talk about helping small businesses, but actually invest most of their money and their efforts in lending to middle market companies and corporations.
• Andrew Clarke is President of Chicago's Ground Floor Partners.