I read this statement in a friends’ post recently and it really got me to thinking: “This COVID lockdown enhances what is missing.” For most of us, we have been “sheltering in place” for the better part of 11 weeks or more now. We have seen the lives of big and small companies alike, thrown into a tailspin to one degree or another. We have watched as major retailers have filed for bankruptcy and began closing down hundreds of locations. And we have watched small business owners struggle to survive with far fewer resources than any of the “big boys.”
There are lessons to be learned from this and that brings me back to the purpose of this blog: “This COVID lockdown has enhanced what is missing.” On the surface you might be saying, “Duh! It’s the customers that are missing.” But it really goes a lot deeper than that. Through all of the confusion, trying to figure out what to do next and rushing to find the money to stay afloat, many small businesses have found that there were a lot of important checkpoints and back up plans not in place. So, let’s look at some of those and see what we can learn from this.
Understanding Your Financials
Many small businesses operate on a very simple cash system. You sell something, you put the money in the bank, and you pay your bills. Most do not have any sort of a budget. It’s simply money in – money out. You may or may not pay yourself with any regularity. Maybe you take money out of your account if you want or need something but most plow the money back into their business.
What we found was missing is that there were often no financial reports to give you a clear financial picture of your business. More importantly, when you went to apply for emergency funding you had nothing to show the lender that proved you were credit worthy.
In some cases, there were reports available for those that were a little more savvy and used Quickbooks or a similar program, but they were seldom looked at. Even more important, they were seldom analyzed to get an accurate picture of the health of your business.
Studies tell us that the average small business has 15 days of cash reserves. That is not enough to even cover one months’ expenses. What do you do when we go through extended periods of set-back such as this?
Understanding Your Customer
Most entrepreneurs will have a great business idea starting out. It might come from something you love to do or love to buy. Maybe it is to fill a local need and make it easier for others to get that product as well. All of these are admirable and excellent starting points. Where the wheels start to fall off is if you have not taken the time to really get to know who your ideal customer is and bring real clarity to who they are and what motivates them to buy from you.
During this lockdown where small retailers tried to find ways to generate revenue, what was often missing was knowing how to pivot your business to meet their current needs. You might not be considered “essential” in the eyes of the government but finding a way to become “essential” in the eyes of your customers was really the challenge- and the solution!
Understanding Your Options
That really leads us to the final point: for many, this lockdown kept them from seeing that what was NOT missing were options. What was missing was the implementation of additional sources of revenue to protect the business from unforeseen circumstances. Things that kept us from “business as usual.” But- FINALLY, there was time- time to plan creatively and strategically. What worked before might not be working now but what was an option? What new ideas and thinking outside the box could we come up with that would provide income whether the doors were open or not?
Social media (love it or hate it) gave us the opportunity to see what others were doing and adapt them to our business. It gave us a captive audience to promote the new things we were doing, and it was FREE! It gave us the chance to become more than just a store and a place to purchase a product. We finally had the time to develop relationships with our current customers and attract new customers.
Businesses that had an online presence, allowing them to continue to sell their products and services, could generate revenue. For those that had been thinking about creating a website and pushed through, they began a very important step of preparing their business for future growth and sustainability.
The ones that were willing to pivot and try new things began to show up in some amazing ways. They became more than just retailers. They became entertainers, when we needed distraction the most. They became educators sharing their products and expertise. Facebook Lives popped up with online sales and product demonstrations. DIY kits appeared where they hadn’t been before, allowing parents to teach or entertain their kids. Hair stylists shared helpful tips and how-to’s. They created DIY product options you could pick up to use at home. Retailers used social media to show products they were looking to clear out and generate some revenue. You could not have customers to come to you, but you could go to them with delivery and curbside service.
Lessons Learned
So, what did we learn about what is missing from this COVID lockdown? Hopefully, we learned that:
- We need clarity on the financial health of our business.
- We need a better understand of who our ideal customer is and how to meet their needs.
- We need to multiple streams of revenue to protect and grow our business.