Opinion: Small business survival tips
We are living in unprecedented times where the new normal now includes social distancing, staying in and working from home.
These headwinds of change are significant and require adjustments to our daily routines.
Small businesses are no different.
They provide a major source of employment and are economic generators across the overall landscape. To wit, the Small Business Administration reports that small businesses account for 1.5 million jobs annually and approximately 64% of new jobs created in the U.S.
In a "normal" economy, 50% of small businesses will not make it beyond 12 months after starting, while 80%, according to Bloomberg, won't survive beyond 18 months.
This is no longer a "normal" economy.
And the fact is, many small businesses will struggle and quite frankly, some won't survive.
In a battle for survival, what can small businesses do today?
• Understand cash flow: Now's the time to closely examine current cash flow needs. Identify short-term resource opportunities. Additionally, begin working with your financial institutions to renegotiate current terms, including rent and payment terms. These institutions will be willing to work with you because they have a vested interest in their client's success.
• Examine all costs and expenses: Review financials and determine what's really necessary to support your business versus what's more aspirational. It's time to analyze and reduce costs you don't need.
• Double-down with customers and business partners: Be there. Show empathy, compassion, flexibility and understanding. People will appreciate knowing "we're all in this together."
• Evaluate and adjust your business model, if necessary: Is your business model still relevant? Technology is an enabler and does your business effectively integrate it as part of its overall operational model.
• Stay home, healthy and be engaged: Use this time to reach out to others and plan for the future. Have online meetings, check on each other and don't be afraid to ask for advice.
What resources are currently available?
Federal, state, regional and local programs are becoming available, but here are a couple that were recently launched. The Michigan Small Business Relief Program is offering $20 million — $10 million each for loans and grants, to those businesses impacted by COVID-19.
Immediate loans to small businesses will be available to one or more Community Development Financial Institutions or licensed SBA not-for-profit institutions. These loans, for eligible borrowers, will range from $50,000 and will cap at $200,000.
Grant funding — non-repayable funds with compliance and reporting requirements — is available for specific projects. It offers funding up to $10,000 to one or more local economic development organizations or nonprofit economic development organizations to support certain small businesses statewide experiencing financial hardship due to the coronavirus situation.
The SBA is offering the Economic Disaster Loan program for distressed businesses. Up to $2 million of financial assistance is available to small businesses or private, non-profit organizations facing financial hardships stemming from this disaster.
And you are encouraged to contact your local MEDC and/or SBA office or other funding agencies for more information. Remember, we're all in this together.
Mark S. Lee is founder, president & CEO of The LEE Group, and can be heard "In the Conference Room" 11 a.m. Sundays on 910 AM, and you can listen to “Small Talk with Mark S. Lee” podcasts at leegroupinnovation.com.