The Coronavirus (COVID-19) Pandemic will make tomorrow’s markets very different. A small business, while surviving, must begin planning for tomorrow. The magnitude of the impact of the Pandemic upon the economy is so great that predicting tomorrow will be impossible for nearly all small businesses.
Conversations with many small business owners, press articles and news accounts commonly talk about restarting the economy. The word ‘restart’ implies simply hitting a button and everything will bounce back to normal. When you restart your computer, it brings you back to where you left off including reopening all programs that were not closed.
When recovery of the economy begins, it will not be a restart.
What is a business to do when over half the businesses it deals with are out of business? When all its employees have left or been laid off? When you know people who died? When some, most or all your customers have developed new buying preferences? When people are afraid to socialize without precautions?
Small businesses must re-think their futures.
Peter Drucker, a thought leader on entrepreneurship, stated “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.”
Small businesses must plan from zero. They must become a startup. It will be necessary to identify a problem, create a solution, build a team and gather needed resources. It may be necessary to develop new customers. One or more of these items may be somewhere else that dictates relocation. There are communities that will welcome a new business.
The only thing that may remain the same is the name of the small business and its owners. Even the name may change to a new brand to appeal to new markets or the team may change as people make a career change or retire.
The small business may not be starting from scratch. It will have whatever assets it holds: people, inventory, intellectual property, buildings, etc. If no ideas spring to mind, existing assets may suggest opportunities.
Some of these assets may have large loans against them. It will be necessary to renegotiate these loans to match up with future revenues. The small business may have incurred substantial debt while surviving the Pandemic. These debts may prove too great taking the decision to continue out of the hands of the small business owner. Some of the government disaster programs may help with this.
Some businesses cannot bear the weight of additional debt no matter how low the interest rate. It may be necessary to raise capital of other forms: sale of equity, revenue sharing, grants, etc. While being creative in choosing a new direction for the business, do not default to old ways of raising money.
When the economy begins to recover, certain activities will receive priority in government funding. These activities will employ lots of people quickly with minimal retraining in order to reduce unemployment. These activities may encompass replacement of old ways of doing things that everyone knew had to be changed some day and tomorrow may be now.
I am certain that there may be as many opportunities created as there may be small business failures. A small business should always have its eye out for new opportunities, however now this may become a mandate. If a small business has a Plan B or C, now is the time to evaluate it.
Picking a goal now and planning to attain it will reduce the stress of dealing with the Pandemic and fill time forced by the quarantines and lockdowns. Preparing to rebuild can never start soon enough.
Karl Dakin, Executive Director and Economic First Responder
Capital Innovation & Technology Institute LLC
This article was first published on LinkedIn on April 1, 2020 at https://www.linkedin.com/pulse/pandemic-planning-re-think-rebuild-restart-karl-dakin/