Ancient Greek folklore tells the story of the Phoenix- a sun bird able to rise from the ashes and regenerate itself in even the most dire of circumstances.
The Covid-19 pandemic has placed many small business owners in a rather precarious situation. Beginning in March 2020, the repercussions of the pandemic hit the American economy like an F5 tornado- rolling across the continent leaving mass destruction in its wake. As the pandemic swept in from every angle of our lives, we all hastily made life preparations for an uncertain future.
The consequences of the pandemic have reacked havoc on some businesses but not all. Within just a few days of the great economic shutdown, large conglomerates began laying off entire workforces and some even filing for bankruptcy. On March 3, 2020 Craftworks Restaurants and Breweries based out of Nashville (the large corp owning Logan’s Roadhouse, Old Chicago, Rock Bottom and Gordon Biersch) filed for bankruptcy shuttering the doors of 261 of its 390 restaurants. The company, already in financial trouble, lost its financing due to Covid-19. According to the S&P index, other retail giants expected to take a hit as a result of Covid-19 are Gap, Vicoria’s Secret, Macy’s, Levi Strauss, and (most recently) AMC Theaters with an estimated 90% revenue loss.
On the other hand big corps such as Amazon, Netflix, Hulu, Facebook (yes, remember they are FOR PROFIT company) and the Pharmaceutical and medical industry are actually seeing an increase in profits.
So businesses catering to “life’s essentials” and/or the “stay at home” markets are actually fairing pretty well during the Covid-19 crisis. However, the entertainment, service, and leisure industries are most definitely in a fight for their lives. Economist and financial advisor David Berliner reinforces this struggle to survive in his statement in Forbes Magazine- “The strong will get stronger, the marginal weaker, and the weak will die.” (1)
So what about small businesses? How are they fairing? Like big corp, businesses specializing in “essentials” are hanging in there. Some (at least locally here in my region) are also seeing a slight increase in profits. But like big corp, businesses catering to the entertainment, service, and leisure markets are struggling. For example, small businesses specializing in farm and garden supplies are seeing an exponential increase in business (some cannot meet demand- another issue in the unstable economy) due to an interest surge in home gardening. Small scale grocers are seeing an increase too as large chain stores cannot maintain a consistent stock or are limiting hours. However, another local small businesses selling “health products” saw such a dramatic decrease in business by mid March, they had to lay off their entire staff of 20 hourly workers without warning as they were left wondering what the future of their business might look like.
So what is a small business to do in these uncertain and unstable economic times? One option is to apply to the federal government for payroll assistance. However, the beaurocratic red tape currently in place with that assistances program has made the process so convoluted and drawn out that by the time funds are finally approved and disbursed, it will be too late for many small businesses. What is meant to be a lifeline for small business owners and their employees has only served to give false hope.
Another option is to pivot. And pivot quickly. One example is the local company mentioned earlier who sold “health products” and was forced too lay off its entire workforce in a matter of days due to drop in sales. Impending shut down, the business owners quickly shifted from production of their normal (now unsellable) product to the manufacture and sale of hand sanitizer (a high demand essential/medical product). Within 3 weeks, they were back up and running. This quick thinking and ability to pivot will most likely ensure this small business’s ability to survive the Covid-19 crisis.
A third and final option is simply to hunker down and weather the storm. This can only be achieved if a small business has enough capital on hand to do so. Businesses with low overheads or a limited workforce are in the best situation to hunker down and simply wait it out. Businesses with low debt loads are less likely to resort to bankruptcy or be forced to shutter their doors.
Regardless of which option a small business chooses, it is clear only the strong are going to survive this crisis. Being self reliant, proactive business owners able to think quickly on our feet and pivot, and pivot quickly if necessary, are the ones poised to come out of this crisis with a chance. Successful small business owners also understand now is most certainly NOT the time to take on additional debt loads. These practices will clearly separate the weak from the strong and ensure a small business’s survival in these uncertain times.
Like the Phoenix, we too shall rise from the ashes and regenerate ourselves in a form perhaps even more beautiful than before.
Business Bevies is a series designed to address small business topics for creatives.