The return of March Madness this past week was a big reminder of everything that has happened in just one year. In my opinion, it was the canceling of this event in 2020 that made the entire nation sit up and take notice that this would not be a normal year.
And, of course, the ensuing economic fallout has swept the country. You know all of this, and I’ve been writing about how to navigate it.
Today, let’s reach for some small business tips you should be taking away from this season.
Because despite billions of dollars in federal aid, tens of thousands of businesses in America have disappeared…never to return. At the same time, thousands of new businesses have emerged, and quite a few businesses (old and new) are thriving.
This past year has forever changed how we do business. Even with the President’s goal of a return to some semblance of “normal” by July, the fact of the matter is that “normal” going forward will be very different than what it used to be.
As business owners, we always need to be ready to adapt to changing times — this time around change just happened to come … faster.
So, what should we do about this? That’s my subject today.
Before I get there, a few notes:
— If you have not yet applied for a PPP, the window for this program (both first and second draw) is rapidly closing. There are new calculations for “Schedule C” businesses (i.e. independent contractors) that can make this a very lucrative program for you. Get this done!
— If you have employees, the Employee Retention Credit program is also potentially very powerful. This is available to you if you saw a 25% revenue dip over a quarter OR if your business has been directly impacted by government shutdowns.
Let’s jump into some small business tips from 2020, shall we
Your Business Better Have Learned These Lessons…
“Your talent determines what you can do. Your motivation determines how much you’re willing to do. Your attitude determines how well you do it.” – Lou Holtz
One year into this pandemic season and many pixels have been spilled by all of the think piece articles over it. There really are a few small business tips that you MUST come away with.
So, let’s dive right into these lessons for any business from this wild season…
Small Business Tips #1 Establish and maintain a reserve of operating capital.
Just like every family needs an emergency fund of at least 3 months of living expenses, so too should every business have a working capital reserve. In my years of working with small businesses, it’s rare to see such reserves. When you operate on tight margins, it can be difficult to establish such a reserve, but as we saw at the start of the pandemic, it can make the difference between staying in business in trying times versus closing the doors forever.
If you don’t currently have such a reserve, there are still opportunities available within the scope of federal relief programs to get some funding for your business. If you have not yet applied for a PPP loan, for example, there is still currently about $100 billion in funding that the SBA has not yet allocated. While Congress is considering extending the program to May 31, the current deadline for applying is March 31.
Whether you would be looking at a first draw or second draw PPP loan for your business, and whether you desperately need the capital right now or not, the fact of the matter is that these 1% loans are an amazing opportunity to obtain working capital and increase your company’s resilience to economic events
Small Business Tips #2 Critically evaluate your need for physical office space.
While the work from home trend has been slowly growing for over 20-years, the pandemic accelerated the trend by at least a decade, overnight. This means an incredible opportunity to reduce your office space costs, even if you’re in a type of business that requires physical space. Since lease expenses commonly account for 5 to 15 percent of a business’ expenses, saving on this cost can be substantial to surviving economic downturns. This means you could be an operating business, but instead of being tied to a physical location, you would have the freedom (and reduced cost) that a virtual business affords. Sounds nice, right?
For service businesses, think about how much office space you actually need. If your whole team can work remotely, maybe you don’t even need a dedicated space in the city. Maybe you can get by just fine with a virtual office or co-working membership that gives access to conference rooms as needed.
For retail businesses, this is obviously a bit trickier. If you operate a restaurant, perhaps you’ve switched primarily to takeout at this time. Think about the likelihood of that continuing in future years, and how that affects the amount of dining room space you actually need for patrons.
If you run a store selling physical merchandise, you obviously need some square footage. But do you need back-office space for administrative staff, or can they work from home? What about inventory storage? Can you find a cheaper off-site storage space?
And… remember… with lots of tenants forced out of business this past year, there are some great deals on commercial real estate leases. If your lease is up for renewal, think about getting into a more affordable location.
And even if your lease isn’t up for renewal, why not ask your landlord for a rent rate reduction? A lot of commercial landlords would rather give you a discount than lose you as a tenant entirely, which means lowering your expenses, which means better things ahead.
Small Business Tips #3 Embrace the digital.
The past year has been kind of a gut-punch to any Luddites (technology phobic) that are still in business. Small businesses with tech-centric processes were clearly able to pivot to the “COVID economy” way faster and more seamlessly than other businesses.
For service businesses, the bulk of interaction can go totally digital. Even in retail, businesses can do most of their sales and customer service virtually.
With all of the stay-at home mandates, people have really started to appreciate things going digital because now they don’t have to take the time to physically go to the store for small things. Depending on the nature of your business, offering value-added services like pick-up and delivery can boost business and also help in reducing the need for square footage.
The ‘change train’ is a way of life, and this train is chugging faster than ever right now. Making sure your business doesn’t miss that train is no easy task, but we’re publishing these blogs to make sure you get on it.
BE THE ROAR not the echo®