Our world has dramatically changed overnight. Business, as usual, came to a grinding halt. The COVID-19 pandemic has caused mass pandemonium and left most industries up in arms. Small business owners – the lifeblood of the American economy – are at the brinks of losing everything. Is this the beginning of small business extinction? Or is COVID-19 forcing necessary adaptation for business owners who have neglected the digital transformation? As the Chinese proverb states, the best time to plant a tree is 40 years ago; the next best time is today. Here are a few ways to adapt your business to survive and thrive.
Adopt an Omnichannel Business Model
It’s no secret that business and society are becoming more digitized. The rise of social media has brought us all closer and gives us the ability to interact with brands and people like never before. Companies, today, need to have a presence online. Google and other search engines are the Yellow Pages. Facebook is the equivalent of digital billboards. YouTube is today’s TV. Brands need to make it as convenient as possible for their customers to do business with them. Omnichannel is the only way to survive in today’s environment. This is the integration of online and offline channels.
A great example of this is Apple. Apple is the epitome of omnichannel. You can purchase a Macbook on their website, on the Apple Store app, in your preferred retail store, or an Apple store. They make it as convenient as possible for a consumer to purchase their goods and services. Find ways to connect with your customers as easily as possible and remove friction points that could result in lost opportunities.
Diversify Revenue Streams
The average millionaire has 7 sources of income. This principle applies to successful businesses, as well. If your primary revenue comes from selling goods, find ways to add bolt-on services to your key products. Conversely, if you are a service-based business, is there a good that could be sold to support your service? Think about ways you can supplement your key business and provide a better experience for your customers. Ideally, this would be a recurring (subscription) based revenue stream and can be provided in an online environment or without the need for much additional overhead.
An example of this would be a real estate agent providing a home-buying online course for future first-time home buyers. This could be a nominal fee and once the work has been created, it becomes evergreen content. Additionally, this positions the real estate agent as an expert in the field and provides a great way to generate warm leads. Here is a great article on how to create an online course.
Cash Flow is King
According to a study done by J.P. Morgan Chase, the average small business has 27 days worth of cash on hand. Given the current situation, this would cause most small businesses to run out of cash and put them at risk of bankruptcy or going into debt. Now is the time to take a hard look at your financials and evaluate the business’s liquidity. A great way to measure this is by calculating the company’s quick ratio. The formula for this is:
Current liabilities are all fixed expenses that would be paid within the fiscal year. Aim for a ratio of greater than 1.o. This would provide your business with the necessary liquidity to weather the worst of storms (COVID-19 Pandemic). Evaluate and scrutinize every expense to make sure they are necessary to generate the current level of revenue. Eliminate unnecessary expenses not involving employees first. If this is not enough, then consider furloughing or eliminating positions. The businesses that will put their people first during these times, will be the ones that come out of this the strongest.