For many business owners, 2020 may be one of the most challenging years they’ve experienced.
The COVID-19 pandemic caused business owners across the nation to reduce their operations or, in some cases, halt them entirely. Industries that weren’t directly impacted may still have felt the indirect effects of the pandemic through supply chain disruption or the shifting needs of the American workforce.
Meanwhile, the upcoming presidential election could signal even more change for businesses. In previous elections years, consumer spending has dropped directly before and during election week. And although the pandemic and the nation’s response may be a focal point for much of the election cycle, topics that are pertinent for businesses owners—trade, taxes, regulations, etc.—are still key political positions and might be subject to change after this year.
In the face of a volatile business landscape, the focus for owners might simply be, “How can I sustain my business today?” Here, we’ll discuss how you can keep your business running through these uncertain times and plan for your company’s future.
Reacting Now
Staying in operation in the short-term might just boil down to one area: cash flow. “What owners are really looking to answer is, how can I preserve my cash?” says Scott Hartwig, Executive Vice President and Commercial Regional Executive at Regions Bank.
Begin by reviewing your income statement and consider how you might be able to restructure your income and expenses. Look at the debts, bills, and accounts payable of your business and negotiate with lenders or providers for more time to make payments. Hartwig suggests, “It’s not just talking to your bankers. Talk to your suppliers, talk to your business insurer. There are a lot of different paths you can be taking as a business owner to improve your cash flow from a short-term perspective.”
In addition to cash flow, owners may need to adjust other business processes in order to keep up with the pandemic’s whirlwind of changes to our day-to-day lives—switching from banking in-person to using digital services, for instance. You may have already implemented some changes out of necessity, but take a moment to consider any other processes that may need to change.
Whenever you adjust your processes, think about how you can improve efficiency—especially for anything implemented rapidly. Building new processes with efficiency from the outset may help your business stay efficient in both the short- and long-term.
Making Difficult Decisions
An unfortunate truth of uncertain business environments—whether they’re a result of a pandemic or a political change—is that you may have to make a number of difficult decisions.
Take a hard look at your business and determine what adjustments you may need to make in order to keep a positive margin. “The first thing I would tell an owner is, you have to understand the facts and stay in reality. I think a business owner cannot be too optimistic, but also cannot be too pessimistic,” Hartwig advises.
Finding that positive margin might require business owners to consider reducing staff or closing a location. While these are difficult decisions to make, they may be necessary to sustain your business in the long-term. Alan Register, Executive Vice President, Commercial Banking / AL MS District Director at Regions Bank, offers this perspective: “Understand that difficult decisions in the present may very well lead to enhanced viability in the future. Our economy and many businesses are extremely resilient, but that sometimes requires making tough ‘scale down’ decisions sooner than one would perhaps like.”
Ideally, making these choices now gives you the ability to resume your growth plans in the future when the business landscape shifts back to something more favorable. Ultimately, a decision that keeps your business afloat today can help provide for you and your employees in the future.
Meeting New Demands
If you can’t find a way to sustain your business as it is today, focus on why your business was viable in the past. Even if the demand that originally drove your business has diminished, fully understanding your capabilities and offerings could guide you to new opportunities that allow your business to survive—or even thrive.
Ask yourself, “What are the fundamental skills of your business? And, what can they adapt to in this market?” says David May, Memphis Market Executive and Regional Commercial Banking Executive for Regions Bank. “Some apparel stores, for instance, have been closed, but have shifted gears and are now making surgical masks.”
Your business may not need to make a radical shift. Still, May continues, “look at the parts of your business where the biggest margin is. It may be a smaller part of your business historically, but, take time and invest more energy and talent in the parts of your business that are still moving along. Even though your total sales may go down, your profit margin may be better.”
If you aren’t finding new opportunities on your own, “Look at what your competition has done. Can you take advantage of something they missed? Everyone is in the same situation, but how you react to it will determine how you grow out of this thing,” Hartwig says.
Preparing for the Future
Most businesses owners probably didn’t have a plan of action prepared for a pandemic. Even if you are hyper-focused on what the next two months or two weeks looks like for your business, it’s crucial to find time to revisit your long-term plans and protect yourself from future disruptions—like the presidential election.
Consider how different election outcomes might impact your business. If one party gets elected and alters the tax on a material your business needs, how would that affect your bottom line? Could you adjust to keep a positive margin? Changes for your business could be indirect as well. How might employee morale shift after different outcomes? “Be it tax structures, regulation, trade policy, or other factors, successful business owners do a great job of playing out the various scenarios so they are prepared for whatever might come their way,” Register notes.
Account for any new processes in your plan and prepare them for disruption. “Come up with alternative ways to accomplish your critical tasks tomorrow if you had too,” says May. Even if the scenarios you are preparing for never occur, you’ll still have those strategies in place and, in the future, you may be able to adapt one of your prepared plans for a disruption you hadn’t considered.
“Form great relationships with your professionals, your insurance agent, your banker, your CPA, and so on,” May suggests. “You need to have thoughtful relationships so you can ask questions like, ‘what should I be thinking about long-term?’ Those people you have relationships with will know enough about your business to give you a tailored answer rather than a general one.”
Review the short-term steps you have taken to weather COVID-19’s disruption. If new business models or strategies kept you operating, evaluate whether those strategies can grow your business in the future and refocus your business and strategic planning to support them. These preparations may be especially valuable during a potential recession that the economic slowdown during the pandemic could create.
Now is the most important time for strategic planning, says Register. “Each industry is different and each business within that industry is unique, so there is no ‘one size fits all’ approach. My advice would be to take a hard look at what it will take to maintain viability for the long-term. Perhaps seek out objective and unbiased feedback from others you trust to provide that feedback,” he explains.
With proper strategic planning in place, you’ll be well-prepared to keep your business running smoothly regardless of the disruptions that may arise in the future.
