Lauren Barron received an MBA from Northwestern’s Kellogg School of Management; she is also the founder and co-owner of Gray Matters Games (GMG). GMG is a company that creates lively and cognitively challenging board game experiences for people with active minds. Through its games, Gray Matters promotes community, encourages fun and gives back to Alzheimer’s research. She shares her advice on how to tackle the challenging times ahead.
COVID-19 and the economic impact it has will fundamentally change the small business landscape. If you are not already, you need to think about this as more than a 2-4 week issue. There will be supply chain shocks that have not yet manifested, consumer confidence may be shaky and people will just operate their day-to-day lives differently. Plan now as if this will impact your business at least through the end of 2020. The good news here is that – if you tackle this head-on, make the tough choices now and consider how COVID-19 can help you adapt your business model, you can absolutely come out of this with a stronger business.
Do Not be Complacent
I worked with struggling business owners for 5 years during the last recession, and the ONLY commonality among the businesses who did not make it were that they were complacent – either in their business model, in how they managed their financials or both. I want to communicate this to you in no uncertain terms: This is not the time for complacency. Small business owners are being called to action.
So – the big question on every small business owner’s mind is: Now What?
I want to communicate this to you in no uncertain terms: This is not the time for complacency. Small business owners are being called to action.
Understanding Customer Demand
I have put together a list of high-level questions to help you start to take inventory of your situation:
Is there still demand for my product or service? All of these questions will help you assess flexibility in your revenue line, which is comprised of two main drivers – demand/volume and pricing.
If the answer is no, consider this: What will customers want when demand returns? OR What does my business offer that’s of value that can drive demand?
Travel-related businesses are a great example of this – demand is low right now; however, domestic travel is likely to recover quicker than international travel in the coming months. What can you do now to address this forthcoming need? Are there domestic travel packages you can devise that will help people with vacations in late summer or fall this year? If yes, start working on them now.
If the answer is yes, but people can’t access your business the way they normally do, what can you do to adapt? Move to virtual services, move selling on to your website, offer delivery, curb-side, etc.?
If the answer is yes, but pricing is a barrier, what can you reasonably charge customers that helps them fit a budget and still covers your costs (at the very least – ideally, still making a profit)?
I am a huge proponent of charging your worth; however, right now, people need help. Let’s all remember that we are humans doing the best we can and try to be in service to each others’ businesses and success.
Reassess Your Business
What is happening in my cost structure? The time is now to reassess every single expense you have on your most recent P&L. What is a variable cost that can be eliminated or reduced now without negatively impacting your ability to operate? What is a fixed cost that can continue in the short term?
What is a fixed cost that would need to be eliminated if there is a protracted COVID-19 impact or resulting recession? Assess your resources – what can technology do to help you eliminate manual processes or help lower payroll? Where are there opportunities to create other efficiencies in your operations?
What is the bare minimum you need to operate? Write a list of everything you would have to spend money on to service a baseline of demand. You should know this now, not later.
Can you seek relief related to utilities, rent or debt payments now? Don’t wait until you really need it – be proactive. Do you have subscription services or other regular expenses that are not necessary right now? Where else can you pivot and adapt on the cost side? What balance sheet risk am I willing to take?
There is a temptation right now to offer suppliers or customers extended terms. I urge you to think about this VERY carefully before agreeing. Unlike in other recessions, the impact of COVID-19 is far-reaching, and unless you have intimate knowledge of a supplier’s financial situation, liquidity and ability to weather this storm, I would encourage you to protect your business as best you can. You have no idea if that supplier will go out of business and won’t be able to pay you in 60 or 90 days. You can always consider Cash on Order or Cash on Delivery as an alternative if you really need supply.
Show Your Value
Last point. If you have historically been a “push marketer,” you need to change your message now. The best thing you can do is: (i) show your value to clients and potential clients in their time of need, and (ii) BE IN SERVICE TO THEM – really and truly. Think every day about what’s in it for them and how you can help.
This list of questions is just the tip of the iceberg on how to navigate an unprecedented time to be a small business owner, but in a situation that can feel paralyzing, I hope it helps give you a start.
While these times are difficult, emotionally draining and, at times, scary for us all – please know this: there are people like me in your corner ready to assist. You do not have to do this alone – in fact, you shouldn’t. The small business community is a powerhouse of people who care a lot, and we stand ready to serve you. We are one.
Stay Up to Date
Learn more about Gray Matters Games and the fun board games they create by visiting their website!
For additional resources, visit our Small Business Resources to Overcome COVID-19 blog post.
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