Practical tips for tough times
Many small business owners are struggling with the business survival challenges presented by COVID-19. Keeping their business afloat is a top concern.
In fact, 82% of small businesses in India were impacted during the first wave of COVID-19.
With experts now predicting a third wave of COVID-19, people and businesses are suffering immense financial and emotional distress. Nomura’s business resumption index has dipped below the pre-pandemic level, lagging by 16.2%.
As COVID-19 cases are increasing in different parts of the country, many states have imposed stringent lock-downs. These lockdowns have adversely affected India’s economic activity — forcing many small businesses to shut down.
Businesses planning on reopening now face various restrictions. There’s also a high risk of decreased sales that can threaten a business of any size.
However, a small business can be particularly vulnerable.
They often don’t have cash reserves to support their business survival during difficult times. In this small business survival guide, we’ll discuss the seven best ways to help your business survive COVID-19 second wave.
1. Apply for government-enabled financial assistance
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During the first COVID-19 wave in 2020, the Government of India announced various financial assistance incentives to ailing businesses in the country. Some of those incentives are still available, and you should check with your bankers if your business is eligible to benefit from those initiatives.
To support small businesses during the second wave, the Reserve Bank of India announced Resolution Framework 2 on May 5, 2021.
The framework is targeted to reduce stress in Micro, Small, and Medium Enterprises (MSMEs), many of whom are facing financial weakness due to lock-downs and closure of businesses.
The framework allows small businesses to restructure or postpone their loan obligations without any penalty or downgrade in their asset classification (a parameter to measure the credibility of a business).
The government has also issued several notifications to provide relaxation to businesses in fulfilling their statutory and regulatory compliances under GST law. The relaxation includes a waiver of late fees, extension of timelines for filing, and others.
On May 30, 2021, the Government also allowed small businesses to borrow an additional 10% of their credit limit to tide over the crisis.
Government is responsive to the pain points of the businesses and releases notifications for business survival support on a dynamic basis. You should consult your bankers and accountants to get the maximum benefit out of these Government schemes.
2. Innovate and pivot your product line if you can
When the going gets tough, the tough get going. This is absolutely true for Indian businesses and entrepreneurs.
There are many successful examples that show how Indian businesses have pivoted their product line not only to ensure their own business survival but also serve the nation in crisis.
Suparshva Swabs began producing much-needed polyester swabs in just 10 days.
Below are few quick tips that can spark some innovation in your mind — and who knows, you could make a fortune out of it:
- Businesses can modify and efficiently change their product lines to include essential products such as masks and hand sanitizers. These products are and will remain in good demand for the coming several months.
- Fine dining restaurants can start providing home delivery services. People are not comfortable stepping out, but you can reach them at home with your product. During lock-down, Barbeque Nation, a famous buffet grill restaurant, started delivering their buffets at home.
- Businesses having capabilities in electronics can explore the production of sensor-enabled hand sanitizer dispensers or home cleaning appliances (since domestic help is not available for most households).
- Businesses earlier offering pest control services can venture into disinfection services which are in high demand these days.
These are just some of the examples to warm up your brain muscles. After all, you know what your business and your employees can do best.
3. Proper inventory and cash management
Cash is the lifeblood for any business, and businesses are required to generate enough cash to pay towards their expenses, obligations, and growth.
In the time of crisis, small businesses are more severely hit than the big ones with ample cash reserves.
Therefore, it becomes more important for small businesses to manage their cash and inventory for business survival. Here are few tips for small businesses to improve their cash position:
- Try to reduce the inventory if possible without causing inconvenience to the customers. Less inventory means more cash at hand.
- Focus on your core products and utilize your limited resources to push towards more production and sales of your flagship products.
- Delay major capital expenditure plans. Focus on the existing setup and try to utilize it to maximum efficiency.
You should have money in hand to take care of your fixed expenses like rent, utilities, employee salaries, and so on. Your business has a higher chance of survival if you have sufficient cash reserves to keep it afloat in these difficult times.
Here’s an article to help you make your business recession-proof.
4. Go online
Taking your business online will not only help your business survive short-term but thrive well into the future.
Photo: rupixen.com on Unsplash
The pandemic has forced everyone to stay indoors, and therefore people are spending more time on laptops, smartphones and desktops.
Here how businesses can benefit by going online:
- If you can easily and economically ship your products to your customers, you should think about launching your eCommerce store. On your online store, your customers should be able to easily browse the products, place an order, and track the delivery. Here’s a guide to the best free WooCommerce extensions and plugins for new eCommerce sites.
- If you provide some teaching/coaching like a yoga instructor, a dance teacher, and so on, you can easily invite your students to a video conference and conduct your session. Here’s a detailed article to help you choose a suitable video conferencing tool. The most popular ones are Zoom, Google Meet and Microsoft Teams.
- If you don’t want to take the hassles of getting online customers, shipping products and providing customer support, you can become a seller on existing marketplaces like Amazon or Flipkart. Marketplaces charge their commission on sales but provide you peace of mind while doing your online business.
Read this post for tips on getting a business website online quickly.
5. Track your suppliers
Most states in the country are under lock-down with varying levels of restriction on the movement of people.
If your business requires raw material from different parts of the country, there are high chances that your business might be impacted by supply chain disruption. 94% of Fortune 1000 companies are seeing supply chain disruptions from COVID-19.
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Here’s what you can do to prevent your business from supply chain disruptions:
- Turn to local sources to supply the raw materials that your business needs to operate. It reduces the risk of disruption as the goods movement is shorter, and it also helps to preserve the environment by cutting down the emissions from transporting vehicles.
- Do not source all your raw material from a single supplier. There have been instances where the entire unit or plant has been shut off due to the high number of Covid cases detected in that area. Therefore, mitigate your supply disruption risk by sourcing from different suppliers.
6. Create your brand and brand community
People are not comfortable going out and interacting with others face to face. Everyone wants to maintain a social distance for their well-being as well as their family.
Creating a brand and a community of raving fans around it is key to business survival when people are not visiting stores or shops.
Every business is not a brand. The brand has a personality, mission, vision, and values.
You can use social media to get your followers engaged in conversation around your products, ideas, new launches, and so on. An engaging brand community goes a long way in the success of any business.
Here’s a seven-step process to building your brand from scratch.
7. Customer retention is the key
Did you know gaining a new customer can cost five times more than keeping a customer you now have? Your existing happy customers are the key to attaining a recession-proof business. Stay in touch with your customers, and they will not only purchase your goods but also provide you referrals to their family and friends.
For retaining customers, you have to go beyond price and discounts. Listen and understand the problems of your customers and try to empathize with them. Focus more on providing the best customer experience, even if it requires making an extra effort to make them happy.
Learn how to start your own loyalty program in this seven-step guide.
This small business survival guide could make the difference
Covid has impacted every business in some way or the other. The majority of small businesses are still reeling under the pressure of extended lockdowns and decreased sales.
The tips mentioned in this article cannot make your business recession-free but at least help you in business survival. Just keep your faith in the supreme power, and this too shall pass.
Image by: Syed Ali on Unsplash