The National Federation of Independent Business (NFIB) reported that “92% of small businesses said they have suffered negative effects as a result of the pandemic.” As such, small businesses across the United States are facing an existential crisis.
Businesses with less than 500 employees contribute 48% of American jobs and 43.5% of GDP. However, even though they’re an essential part of the United States economy, they are financially fragile, with little cash available or resources to cushion a financial threat.
With many small businesses now rushing to reopen their doors, we created this guide to help navigate the current landscape.
The Small Business Guide to Rebuilding After COVID-19
1. Evaluate the financial damage to your business
You need to be able to answer just how badly your business has been affected?
Start by reviewing your financial statements, specifically profit and loss or cash flow statements. (If you haven’t done that already, then do so now.) Compare those numbers to where you were last year to understand just how much your small business is down.
Apart from the financial situation related to sales, profits, and cash flow, also take a look at other ways your small business was affected. For example, if you laid employees off, cut your advertising budget, or if you lost customers to your competitors, these should also be configured into your financial statements to help you rebuild.
Take a look at what expenses can be delayed. Some cities have put a two-month freeze on a landlords’ ability to evict renters and small businesses. Therefore, you need to be transparent to landlords, or whoever you need to pay, about the reality of your financial situation. However, make sure you’re aware that it can be hard to catch up.
It’s important for small businesses to reduce any unnecessary expenses by managing their employees effectively with free-to-use tools. Many tools out there cost a fortune but can be replaced with a free app that allows managers to communicate, collaborate, and track their employees’ performance. Businesses should keep communication flowing with their employees about the company’s situation to avoid disruption to daily operations.
Read more here about free solutions you can use today to ease the financial burden.
Connecteam is the best free app for small businesses
Connecteam’s free-to-use app helps small business owners and managers get back to normal by managing their employees more effectively, communicating with them, tracking their work hours, real-time scheduling, and efficient operational work.
2. Assess if you require funding
Small businesses have a number of resources and relief programs that are available, including new provisions in the stimulus package enacted by Congress. In addition, there are also grants and emergency loans from states, cities, and community organizations that small businesses can access if additional funding is needed. See below our list of funding sources available:
- The SBA (Small Business Administration) in the United States has set up coronavirus relief options for small businesses. You can read more about that here, otherwise see below for the main funding options available under the SBA.
- Paycheck Protection Program: The SBA has guaranteed loans of up to $10 million to eligible businesses. In addition, the loans are provided by lenders such as banks and credit unions. Paycheck Protection Program loans can be forgiven if small businesses maintain payroll for eight weeks at employees’ normal salary levels and also use the loan proceeds for qualifying expenses. The SBA has explained it as, “This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.”
- EIDL Loan Advance: Under the SBA, the EIDL loan advance provides up to $10,000 of economic relief to small businesses that are currently experiencing temporary difficulties.
- SBA Express Bridge Loans: This allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 more quickly. This helps provide support to small businesses to help overcome the temporary loss of revenue.
- SBA Debt Relief: As written on their site, “The SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.”
- Review traditional SBA 7(a) loans and microloans
- Small business term loans from banks, credit unions, and online lenders
- Business credit cards
- Inventory financing
- States and municipalities add funding programs almost daily. Check your governor’s website for real-time information about funding relief available in your area. The National Governors Association has a list of governors’ websites.
3. Make a plan of action
Research shows that people are much more likely to make mistakes when they are cash strapped and are over-thinking about financial stressors. This sounds like a lot of small business owners right now. However, you cannot rush into making a decision! Especially not right now.
Give yourself time to create a plan of action so you can gather as much information as possible. Talk with a trusted advisor or a close friend or colleague so that you don’t do something you’ll regret down the road.
Break your big goals, like save my business, into smaller, more manageable goals. Such as step one – call my landlord, step two – review finances, and step three – apply for funding. This is a more effective way to create a plan that works for you.
4. Consider how your customer’s needs have changed
Just as your life has changed during the course of this pandemic, so has the life of your customer. What once worked just doesn’t anymore and there is no way to tell if things will ever “go back to normal”.
Think about how you can change your business model to fit your current situation and your customers. They may want to order online instead of coming into your shop, consider options for delivery or pick-up. Reach out to your customers to ask them what they’re looking forward to and show that they can buy from you without fear or uncertainty.
“Give them [your customers] a way to support your shop and your community with a donation or purchase,” said David Rusenko, CEO and founder of Weebly. “People are always looking for ways to help recovery efforts, and supporting small local businesses is a great way to support a recovering community.”
Update your website and online store to have your current products so you can continue to make sales but you also can spread awareness about your efforts personally.
5. Retain your best employees
There is no doubt that your employees are your most valuable asset. If you were forced to lose your best team members during the crisis then it’s much harder to run operations comfortably. Not to mention, if you are forced to cut labor costs, you still want to have the option to rehire your best workers. So what can you do? Think of the long term and be considerate, act like a human being.
The small business loans can help cushion the blow so you don’t have to let your best workers go. Maybe a temporary layoff is the best option but make sure it doesn’t become permanent. Consider a furlough for your employee instead of letting them go.
In any case, talk to your employees. It’s the considerate and human thing to do. Your employee will greatly appreciate being kept in the loop and having their voice heard.
The U.S. Chamber of Commerce actually suggested that flexibility will pay off in the long run if you allow your employees to return to work at their own pace, or to even work remotely if possible.
Implementing a team chat app, like Connecteam, ensures you keep an “open door” between your employees and management. In real-time and in the click of a button, you can easily share a company announcement, weekly goals, celebrate the employee of the month, birthdays, anniversaries, and much more. In addition, your employees can instantly contact you with problems they have or if they want to share a win, and they can even send feedback (through a suggestion box or a survey done via the app) on any matter.
With an open and healthy line of communication, employee retention is a much easier process.
Keep your small business on track
Everything you need to keep your small business on track is available in one app. Connecteam’s all-in-one employee app easily allows you to communicate with all employees, manage payroll, job scheduling, time tracking, make checklists and forms to digital, and much more.
You can rebuild your small business
Navigating the current crisis is possible with a healthy balance of urgency and caution. Be aware of the current market climate and your own financial situation to avoid making mistakes.