Strategic Guidance for Small Businesses During COVID-19
Here, we offer a framework for how small businesses might think about their strategy and next steps in light of COVID-19. This is the second in our series of pieces to help support businesses in a small way through this public health emergency. Check out our first piece: A Summary of COVID-Related Small Business Financing Opportunities.
We’ve developed these resources for businesses and business leaders that have been negatively affected by COVID and are struggling to find their footing with slumping sales or halted operations. In these times, it can be difficult to sit down and develop a real action plan; but we think this is the most important thing to do - for your business and your peace of mind.
We see three phases of work, and a myriad of steps to take in each phase. Some may or may not be relevant to you - depending on your industry, how affected you've been by social distancing measures, the size of your team, how heavily you rely on your business as a sole source of income, etc. We encourage you to pick and choose the tips that make the most sense for you and your business.
Use our planning template, available here, if you find it helpful in navigating these steps.
PHASE ONE: ACKNOWLEDGE YOUR CURRENT REALITY, ESTABLISH A CONTINGENCY PLAN
One of the most empowering steps is to get comfortable with: “what is the worst that can happen right now?” and “how will I respond if this comes to pass?” Phase One is about voicing your biggest fears, having a plan if these become a reality, and recognizing that you are resilient and can get through it and be stronger on the other side.
1. Get in the right frame of mind so you can focus on outcomes and action
It is unclear how long this public health emergency will last and what the long-term impacts will be. But, we cannot let our optimism and investment in the future subside. Before you sit down and think about your business, I urge you to move yourself into a positive and solution-oriented space. Maybe that is a workout, time with your kids, a walk, a solo dance party. I personally find it helpful to reflect on the many successful endeavors that were born through crisis or recession. Here are three stories of success born out of recessions to inject your planning with hope and creativity.
Kraft Miracle Whip: The original product was made with eggs, oil and vinegar and was a huge hit when it launched in the early 1900s, Thirty years later, during the Great Depression, no one could afford this luxury. Kraft created a new emulsifying technology that meant the company could make this mayo alternative without using their original, pricey ingredients. The cheaper product was a hit and is still popular today.
The original iPod: The first generation iPod was brought to market in the wake of the dot com bust of 2000. Despite its high price tag ($399 to start), 600,000 people bought one by the end of 2002, and by 2003, over 2.5 million people had one. This success is partially credited to the fact that households were looking for inexpensive, at home entertainment at the time. The iPod was a more affordable luxury than concerts or new stereos.
Netflix: Before there was Netflix binge watching, the company was just a mail order DVD business, launches in the early 2000s. When the Great Recession hit, Netflix found its footing because it became an innovative and affordable alternative to cable and satellite TV services and to theater going.
2. Understand your cash position, and establish a worst case scenario plan
Understand your cash position - how much you have, how much you need each week or month to get by, and establish your action plan for three scenarios:
- A best (but realistic) outcome
- A moderate (expected) outcome
- The worst case scenario
For example, we know EcoEnclose will continue to have slow sales for some time and we may face supply chain interruptions and major operational changes each week. We have identified three potential scenarios for just how much our sales will slump (as a percentage and absolute figure), how long it might slump for, and how much small business funding support might be made available.
For each of the three scenarios, we’ve settled on an accompanying action plan for our operations, inventory and team.
To be clear, we know our actual reality probably won't fit neatly into one of these scenarios and it is hard to know what will happen right now. But even with that level of uncertainty, this step helps in many ways. It allows us to be fully transparent with our team. It reduces our need to make day to day decisions out of fear. And it forces us to come to terms with our fears, which always makes us stronger.
3. Identify other goals you have for this time
For any business suffering right now, your main goal may simply be to survive and have a viable business on the other side of this.
But you may have other hopes as well, which we encourage you to identify and write down. Examples of potential goals might include:
- A commitment to keeping your entire team employed and insured for as long as possible
- Using this time to rethink your product set or establish a new service or sales channel
- Ensuring you don't make decisions that compromise on your eco commitment, even as you find ways to reduce costs or invigorate sales
- if your operations are fully shut down, your goal may be to stay well connected with your community and customer base, to lay a strong foundation for when you are moving again
These higher order goals may help give you a sense of purpose and resolve as you move through the next few weeks and months.
PHASE TWO: LOOK FOR NEAR TERM OPPORTUNITIES
What are your strengths? What is your business uniquely able to do? How can you use these assets in a way that can benefit your business or your community right now?
4. Invest in a great ecommerce experience
If you have historically been a brick & mortar operation, or split your efforts between physical and online sales, now is a time to invest fully in your ecommerce strategy so your fans can still get your goods even as social distancing has shut down retail. A few steps to help you grow your online sales:
- Shipping: If you sell something fairly lightweight and small, a free shipping policy can go a long way. Even if your own shipping costs are fairly high, consider a free shipping coupon code for a period of time to maximize conversion and make it easy for your in-store shoppers to opt for the online purchase.
- Be clear on when things will ship: Share your likely lead times, including any extended lead times you anticipate right now if you are reducing hours or days in the shop to maintain social distance.
- Broad or targeted promotions: Sales can be a great way to generate cash in the short term, especially in inventory you have been sitting on. Some sites are engaging in daily flash sales right now, to make it more fun for someone to come back each day and see what is available.
- Sell directly through Instagram: This is especially important if you already have a strong following on Instagram and sell photo-worthy goods. Learn more here.
- A clear and easy return policy: Including a flexible timeline for returns and exchanges, easy to access steps on how to initiate a return, and packaging that makes it seamless for customers to send back their items.
- Strong customer service: We all miss personal connections right now. Find a way to offer steady customer service that is truly human- through phone, email or chat - to help guide people through your products and navigate any friction in the purchasing or returning process.
- Choose the right selling platform and make your site personal and excellent: If you pulled together a quick site without thought to the user experience or haven't done much to personalize your Etsy shop, invest in these steps now so when people find you online, they know what you are all about.
5. Stop selling things or doing things that lose money or don’t support your values
Crises and recessions remind us to do what we should always be doing - evaluating our products and our expenses to see what we should stop doing.
Take a hard look at your operating costs and cut back on non-essentials: Subscriptions, services with questionable value, storage space, etc.
Then review each of your products and/or services and consider the costs (raw materials, labor, and storage costs) of producing, stocking and shipping them against its price or its ecological value - is it worth it?
If not, consider phasing it out. These steps are tough (the things we produce are like children to us!) but help you focus your energy on the right things.
6. Rethink your product set or services
Can you produce or sell what people really need right now?
In this unique time, a host of products are emerging as temporary must haves: Toilet paper and paper towels (zero waste or sustainable alternatives), laundry detergent, soap, moisturizer, homeschooling supplies, health and immunity boosters, home cleaners, family games, at home fitness supplies, to name a few.
Think about your product set and production capabilities alongside the kind of items that households, businesses and responders need right now. If you already sell what the people need, great - how do you position your products the right way? If you don't, can you make a temporary change to what you make and/or sell?
Can you package what you offer into something relevant or giftable right now? Create packages that support distance gift giving or solve newfound challenges from being home bound. Examples include packages that promote peace and serenity, support health and wellness, help people learn new skills and stay busy and productive, teach kids at home, help people stay connected, etc.
As a bonus, offer to hand write notes from your customer to a gift recipient, to add a truly personal touch in this time of separation.
Here are some examples to get your wheels turning:
Microdistilleries, such as Woodinville Whiskey Company in Washington, switched from making bourbon and rye to hand sanitizer. 30 distilleries in the state are now making 3,000 gallons and sanitizer a week, a direction that distillers nationwide are now following.
Color Me Mine storefronts (a franchise Paint Your Own Pottery studio) is now packing up to-go and delivery painting kits to help kids stay engaged and occupied at home.
7. What can you offer virtually that can complement or replace your main product?
Concerts are now streaming using services such as Live Stream and art shows are going to virtual using services such as Art Steps. Consider if and how you can incorporate these types of virtual events in your business.
Businesses that have historically sold at fairs and in-person marketplaces are finding virtual market alternatives.
Conventions and trade shows are finding ways to move online.
And, we are entering a new era in the DIY movement as people do things at home they previously went to salons, gyms and other service providers for. Consider ways you can deliver your service virtually or support your customer as they attempt things at home that you have expertise in. This can be done in such a way that it drives revenue (if you charge for the service) or free content that can strengthen your brand.
Finally, we've seen a lot of companies offer downloadable resources or set up a customer community that allows for advice sharing and interaction.
If video is an interesting direction for your business, check out Loom, which is offering its video service for FREE to businesses in response to the COVID crisis and Zoom, which offers fairly extensive video conferencing technology for free. Slack is also an easy solution to build a quick and informal online community.
Here are some examples of creative ways businesses are offering virtual services, sometimes to generate revenue and other times to stay connected with their community during this down time.
Glamaty, a brick & mortar hair salon serving multi-ethnic women that was temporarily stalled due to COVID, created Best Hair Ever as an alternative service. This online club is a monthly membership that gives people access to easy step-by-step tutorials on how to style hair, based on one's own unique needs and the expertise in the community.
Metronomy, a band scheduled to play sold out dates across Europe is now gearing up to give online lesson through a pay-what-you-can model that will help generate a small amount of revenue and keep the band front and center during this time of isolation.
Burn Boot Camp Wilmington is one of the many fitness studios nationwide that has closed, but is offering classes virtually. Again, this helps keep gyms connected to and supporting their members, and helps create enough value to encourage members to maintain their payments during an extended hiatus. Many gyms are also lending out equipment (fully disinfected first), which leverages a facility's assets, generates some cash flow, and helps people at home stay healthy and active.
Callahan Ceramics put together a really fun virtual giveaway that could generate a lot of customer interaction, even if it doesn't necessarily lead to immediate sales. They made free downloadable coloring pages that can be printed or even colored digitally! They turned it into a contest - the best designs will be made into actual mugs!
8. Redirect team members whose core functions are shut down
If an aspect of your business is fully shut down, such as your retail shop, consider if there is a way to temporarily change your workers’ job descriptions.
Moving retail workers into online order fulfillment can be a good first step. Additionally, we recommend identifying someone who is currently underutilized and assigning that person to the task of organizing and staying on top of the myriad of COVID-related financing and support opportunities emerging every day. This is a hugely valuable use of time as it can help ensure you leverage every opportunity available for your business.
Other switches are not as straightforward but may be great steps that lead your business into unchartered and exciting territory while also keeping workers employed. Note that the newly announced Federal Stimulus Package will offer forgivable loans for businesses that retain their workers, so even if these types of shifts can be difficult, you may be able to access funding to offset the costs.
One innovative example I’ve read: Lin Qingxuan, a Chinese company that closed 40% of its stores with their lockdowns. They redeployed 100 beauty advisors from those stores to become online influencers, which actually doubled their sales in a time when maintaining levels seems ambitious.
Another example in China highlights the potential for collective effort among different companies to help keep people employed. For example, in response to a severe decline in revenue, more than 40 restaurants, hotels, and cinema chains shared employees (who were significantly under utilized given the downturn) with Hema, a “new retail” supermarket chain owned by Alibaba, which was in urgent need of labor for delivery services due to the sudden increase in online purchases.
MagicCo., a Brooklyn based company that helps brands be successful on Amazon and Google, saw that two of his team - his office manager and cleaning person - could no longer do their usual work, even as all others could work from home. He redirected them towards at-home administrative work and solving newfound challenges that arise when team members work virtually, allowing the company to retain them for when everyone returns to the office.
9. Give...to your community, first responders, your employees, fellow small businesses, and your customers
A lot of people and institutions need support right now, and if you are in a position to give, it is an incredible step to take. It helps connect yourself and your team to the community, creates a sense of control (versus hopelessness), spreads positivity and strength, and - as an added bonus - helps you be remembered as a business that takes actions and contributes when the chips are down.
Times are tough, so remember that giving does not have to be big. Small gestures go a long way as well. Some ideas and examples.
Colorado Mesa University is reimbursing faculty and staff take out and delivery purchases up to $150, to help local restaurants that have been forced to shift their business right now. Even just reimbursing one meal for your team is one way to show support for your team and fellow businesses.
Contribute to a COVID-19 GoFundMe campaign of your choice.
Offer discounts on your products to people on the front lines such as nurses and EMTs.
Raise money through product sales. Moab Artist, Aaron Rotchadl, is auctioning off pieces and donating proceeds to local non-profits among the COVID-19 chaos
Help your team. Founder of Market Veep, a digital agency learned that an employee with two young kids did not have time to stock up before the shutdown. She responded by sending healthy snacks and crafts for the children. Founder of Five Wellbeing Studio+Spa in Colorado set up an Employee Wellbeing Relief Fund. When someone buys a gift card, 25% of it goes into this fund.
10. Consider and clarify your overall brand message right now.
For some businesses, this COVID crisis will become a meaningful call to action. Go Daddy has invested fully in this type of approach, creating an entire campaign, #OpenWeStand, and resource center focused on helping small businesses sustain through this time. I've seen businesses step up in their commitment to keep sustainability strong as COVID fears have led to less eco-friendly habits nationwide, and mobilize their brand around this angle. Our bookkeeping team has made it their job to keep us apprised of each IRS and funding update that emerges, which has not only helped us tactically, but also made us feel taken care of and supported, a sentiment that will remain long-term.
Consider if and how this crisis may actually be a call to action for your business to step forward in support of a concept, group or goal that you think needs attention right now. If so, this can become a unifying theme to your strategies and customer communication in the coming weeks.
PHASE THREE: REFLECT AND BUILD FOR THE LONG-TERM
Even if none of the above steps make sense for you or your business, this last phase - reflecting, taking stock in yourself and your business, and identifying the lessons you want to bring forward with you - seem relevant for most of us.
11. Create, innovate and prepare to launch new offerings
Sometimes downtime like can be a blessing, forcing you to turn your attention to those ideas you've been too busy for or have needed space and distance to tackle. I've been so excited to see many creatives posting on Instagram about how their time at home is breeding insane amounts of creativity and production.
The story of Isaac Newton is also making the rounds right now. Newton made some of his most groundbreaking discoveries during what he refers to as his "year of wonders" while in quarantine during the Great Plague of London.
What ideas have you been putting off that can resurface right now? What prototypes can you build? How can you use social media or video to get feedback on what you're developing so you can quickly iterate?
12. Consider which of your near term strategies should become permanent
Hardship is a breeding ground for positive change.
You may surprise yourself and find that some of your near term “survival” strategies are actually ones you want to adopt long-term, and can take your business to new heights long-term. You may find that measures you put in place to better communicate with your team and customers, to be transparent and show some vulnerability, and/or changes you make to your own personal and business priorities are all better for you and your business.
Keep this in the back of your mind as you're strategizing and as you see your new directions unfold.
Over time, the world will go back to business as usual, but before you do, take the time to identify the changes that should endure.
13. Reflect on how, if at all, you want to be better set up for the next crisis
History has shown that once-in-a-lifetime challenges impact society at least every decade or so - recessions, wars, public health crises, major natural disasters. Use this time to think about what you wish you had had in place going into this current crisis, and build a plan to achieve this in the coming years.
For example, perhaps you found that you needed a confidante throughout this tenuous period, and you struggled with who to vent to and brainstorm with. Use that reflection to find a trusted advisor who can support you during good and bad times.
Perhaps your supply chain was heavily disrupted and you found yourself out of product at a critical time. Consider diversifying your supply chain and/or bringing it in country to help you better work with partners through critical events.
Or if a lack of income and limited cash has left you - as it has so many small businesses - in an extremely hard place, perhaps you are motivated to consciously build a robust savings to help manage through future crises.
Maybe you just wished you could have approached these days differently - calmer and steadier, less drawn to the hourly news update, and more assured of your own strength to get through this. This is a good signal to adopt the habits of reflection and meditation that will make you better right away (well before the next big thing hits us).
14. Clean your House, Support the Planet
If your business finds itself with a bit more time right now, see if you can use that time to clean up your systems and processes.
This may be the perfect time to revamp your website, fix your fulfillment workflow, improve your bookkeeping, revisit your protocols, etc.
Then, see if there is more you can be doing to better your ecological impact. Assess your waste and diversion levels, your energy usage, your source material, your energy sources, etc.
These are steps that can help you stay connected with your core values even as other issues eclipse them in the short term.
We'd love to hear how you've reflected on and bolstered your business in light of COVID measures. What steps have you taken, how have they helped, and where do you think you'll go from here. Share your stories, reflections or feedback with me at [email protected]