\u201cWe\u2019re finding that you can\u2019t save businesses by just allowing them to reopen,\u201d Mills says. \u201cUntil it\u2019s safe, their employees don\u2019t want to come back. Their customers don\u2019t want to come back. There\u2019s no one out shopping on Main Street.\u201d<\/p>\n
The situation appears bleak, but owners still have options, says Mills, who led the US Small Business Administration from 2009 to 2013 and was an Obama cabinet member. Getting through the coming months will require extreme ingenuity and shrewdness from business owners, and additional waves of aid from the federal government.<\/p>\n
Three moves small-business owners can take now<\/h1>\n
Mills offers three recommendations to cash-strapped business owners:<\/p>\n
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- Focus on social media and email to reach customers<\/strong>. The coronavirus pandemic forced many analog companies to embrace digital technology, such as contactless payment tools and online booking software. During the last week of August, about 25 percent of respondents to the\u00a0US Census Bureau\u2019s Small Business Pulse Survey<\/a>\u00a0said they were increasingly using online platforms to promote goods and services.<\/li>\n<\/ul>\n
However, businesses don\u2019t need a comprehensive digital strategy\u2014or even a website\u2014to succeed online. An Alignable survey found that 25 percent of respondents were turning to social media to reach customers while 18 percent were engaging them through email.<\/p>\n
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<\/p>\nThe key is to harness the most effective outlet for a firm\u2019s products and services, Mills says, citing the experience of milliner Linda Pagan, owner of\u00a0The Hat Shop<\/a>\u00a0in New York.<\/p>\n
\u201cShe decided to create these crazy videos and put them on Instagram, and they\u2019ve taken off,\u201d Mills says. \u201cShe still takes customer orders over the phone, but now she has a few more sales per day and says that\u2019s enough to make it through.\u201d<\/p>\n
Scrutinize every cost<\/strong>. Every dollar matters now. Companies hanging by a thread should try to renegotiate contracts with suppliers and landlords, and refinance debt. Is there a new supplier for a key item the company uses? Would opening only during high-traffic hours reduce electricity bills?<\/p>\n
Perhaps for the first time, small-business owners accustomed to monthly accounting might need to track day-to-day spending so they can react quickly to changing economic conditions. Free and low-cost tools from banks and fintech firms can synthesize financial performance on real-time dashboards, making monitoring less onerous.<\/p>\n
\u201cSmall-business owners tend to focus on their customers, and on their products and services,\u201d Mills says. \u201cThey often don\u2019t have time for the accounting and paperwork. But knowing your cash situation is mission critical in tight times like this.\u201d<\/p>\n
Concentrate on the best profit opportunities<\/strong>. Small-business owners must identify their most valuable products and services and eliminate everything else. If a restaurant\u2019s tried-and-true burger has a stronger gross profit margin than its artisan cheese platter, it\u2019s time to dump the cheese, at least for now.<\/p>\n
It\u2019s equally important for firms to understand their most loyal and profitable customers\u2014who they are, what they buy, and how to engage them. Beyond their purchasing power, loyal customers can become a company\u2019s best advocates, providing powerful word-of-mouth advertising that\u2019s authentic and free.<\/p>\n
Innovation like this has been paying off. Sixty-four percent of small-business owners say they can continue operating under current conditions for more than a year, up from 34 percent three months ago, according to a\u00a0CNBC\/SurveyMonkey survey<\/a>\u00a0of small-business owners.<\/p>\n
For government: Aid that\u2019s easier to access<\/h1>\n
The US government also needs to do its part and extend aid efforts, Mills says. The Paycheck Protection Program allocated $659 billion in forgivable loans to small businesses that agreed to retain employees and maintain salaries. Almost 73 percent of respondents to the Census Bureau\u2019s weekly Pulse Survey said they had received PPP assistance as of August 29. The program, which expired on August 8, increased a participating business’s self-reported survival odds by 14 to 30 percentage points and likely reduced the number of firms that permanently closed, according to a\u00a0new HBS study<\/a>.<\/p>\n
While the loans helped many businesses get through temporary shutdowns, critics argued that aid tended to go to wealthier, connected applicants and, in some cases, to\u00a0publicly traded companies<\/a>. Despite these problems, Mills considers the program a step in the right direction during an unprecedented crisis.<\/p>\n
\u201cPPP was designed to bridge small businesses for eight weeks,\u201d says Mills, who has been advising congressional and business leaders about aid strategies. \u201cNo one could have predicted how long this would go on.\u201d<\/p>\n
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