What a time to be a small business owner.
With little warning and literally no time to prepare, COVID-19 breezed in and stopped business (and life) as we know it.
It’s been disheartening to see small businesses facing this beast down as best they can while trying to chart a way forward.
For small businesses, it hasn’t been easy. They’ve had to deal with:
It would seem these uncertain times are doing two things to small business owners:
Either way it’s not great. This is just another battle in a long list of many for Small Business.
So, why bother?
Because you believe in what you do even if the world is against you. Belief is the most important mindset to counteract a crisis and hanging in shows strength.
But in order to get through tough times you need more than courage. Like a sherpa stuck on an icy mountain, you need to be armed with the necessary tools to power through to reach the summit.
If you have the right strategy and know when to execute it, combatting COVID-19 or any other major disruption to your small business becomes much easier.
A global pandemic, an economic downturn or recession, war or terriorism, or major loss of customers.
There’s a long litany of reasons that can greatly impact or even jeopardise your small business.
Surviving uncertain times is not a matter of hope, it’s a process of strategy. There are four main elements to building your ultimate business survival guide and each follows on from the last.
If you can apply these four elements to your business (and mindset) you’ll be in a strong position going forward.
Nobody starts a business to fail, but many do. In fact, nearly 80% of businesses in Australia fail and that stats was alive well before COVID-19, so expect more as these uncertain times continue.
The fail rate of Small Businesss has nothing to do with the market or your competition. Failure has everything to do with the leadership of that business.
So, if your business is failing and the future looks bleak, conduct a (pre) post-mortem to ascertain why. Ask questions like:
Stopping failure before it’s too late starts by admitting to what you got wrong first.
This is about being nimble and adapting to change quicker than those who are competing against you in business. An inability to change is a major reason for going out of business, just ask Nokia.
It’s paramount to your success that you’re the one that offers a solution needed by your customers when a disaster hits. It’s not uncommon for your products or services to be (in some part) redundant when a distager hits, so you have to respond.
Look closely at the opportunities section of your SWOT analysis and dissect what your newly found opportunities mean in a significantly changed market.
If your competitors don’t do this, it can be your point of difference and a lifeline.
For example, having a high ticket business system. Let’s look at Walmart for instance, they use a low ticket business system and can be found all over the world, focusing on delivering the lowest price possible to their consumers.
Compared to a company like Apple which uses a high ticket business system, their branding and focus on producing innovative, top-of-the-line products have made them famous internationally.
If you offer high ticket items in a market with limited money to spend, what lower ticket items can you create to keep cash flow moving in your operation?
You may not want to do this, but if it’s the difference between life or death in business, I would until the situation changes.
Truth is, you need this when times are good too but in a crisis situation, having sound financial measures in place is a nonnegotiable.
According to US Bank's Jessie Hagen, the top reasons given for a failed business were cash flow problems at 82%, 42% cited an insufficient need for their product or service, followed by a lack of cash and dysfunctional or unmotivated team.
To survive you need to make educated decisions around finances. CEOs from the top end of town are decreasing their huge salaries by 20% but this is largely tokenistic when they’re also slashing jobs.
Cutting expenses is not the same as being cheap. So I wouldn’t recommend lowering your employee salaries, but finding a solution to ease your financial constraints. Do things like:
Cutting expenses, especially those recurring expenses or monthly charges, is your first step to saving your failing business. If you have expenses that don’t bring you more money, cut them.
Then, take a closer look at your sales record.
A small business lives or dies by their sales record and if you can’t sell, you’re not in business for long.
Some would say you have to bunker down and just maintain what you can in a crisis. That’s not the attitude of the successful in business, they look for ideas that are needed and can be sold when times are tough.
It’s well known that more millionaires are made in a recession than in other times and you need to think and act like them.
In the 90s, toy maker Lego lost money when it faced competition from the emerging video games industry. The company did many things to correct the ledger like restructured its supply chain and made changes to its sourcing, manufacturing, and distribution.
But the key ingredient was including customers in product development. They knew that if they were to compete against video games they needed to know what people wanted (so they could sell it to them).
Like Lego, you need to understand:
If you can identify answers to these questions and provide a solution that’s fit for purpose, you’ll be able to sell ice to the Eskimos.
Surviving a crisis is just part of being in business. If it’s not COVID-19, it will be something else and it’s probably not far off hitting us.
The four elements above are what strong businesses apply in their survival strategy. In the coming weeks, I'm going to deep dive into each of these elements and give you a step-by-step guide on how to build your ultimate business survival guide.
Most weren’t ready for this uncertain situation, but with my help you’ll be ready to stare down the apocalypse with confidence.
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