At the start of the coronavirus pandemic, small business owners braced for what seemed like a short-term inconvenience. But as the coronavirus pandemic drags on, many small businesses are still operating at limited capacity or have shuttered completely. The past months have been tough on everyone. We’ve been urged to stay away from our elderly family members and other loved ones, wear masks in public and social distance.
Governments have shut down bars and restaurants, limited gym use, postponed sporting activities, restricted hair salon and personal care services, and encouraged people to stay home. Then there’s the travel industry – everything from air travel to cruise ships are feeling the pain of consumers staying home. These actions have forced many establishments to lay off staff, and small restaurants and shops have been shuttered, not to mention that the entertainment industry has been all but decimated; concert venues and movie theaters continue to sit vacant. Mom and pop stores unable to transition to an online platform are closing left and right. Ultimately, the economic impact of these actions has devastated small business.
According to a recent Yelp study, almost 100,000 small businesses in the U.S. have closed permanently since the pandemic began.
Local and National Economic Outlook
In Washington, the lack of progress on another stimulus package has forced small business owners to dig deeper into their own pockets to pay essential bills like rent, utilities, and healthcare. Over $300 billion in small business loans have been deployed via the Paycheck Protection Program, which continues to offer Economic Injury Disaster Loans, represented by the U.S. Department of the Treasury and the SBA. Payroll Protection Program (PPP) funds kept many business’ doors open, but unfortunately, there are little to no operating funds left. The bottom line is the crisis has lasted longer than anyone anticipated and as state reopening plans keep changing or getting pushed back, businesses trying to survive are falling deeper into despair and debt.
The jobs situation is a mixed bag as well. Nationally, over 5.5 million people are unemployed, with daily unemployment claims exceeding 700,000 people. Unemployment in Michigan was 8.5% as of September 30, 20201. Clearly, the recovery has stalled and is potentially going backwards.
How Can Businesses Bounce Back?
What can small businesses who are struggling in the hardest hit industries do to bounce back? The ability to think outside the box is a tremendous benefit to businesses trying to keep their doors open and not fall into debt.
Let’s reflect on Michigan restaurants, for example. With indoor dining shut down again, many of them are getting especially creative by carving out new outdoor dining spaces – transforming parking lots and streets into gathering spaces for families who are tired of cooking or friends desperate to spend time together. Bars and restaurants have amped up takeout and delivery options and some have even received clearance to offer carryout cocktails, once illegal, but now an olive branch offered by the state to the suffering dining industry.
Remember, avoiding getting help only digs a deeper hole for a business in trouble. You may not like reaching out in a time of need to your lender, vendors, or tax authorities due to the fear of rejection, but you must overcome your embarrassment or pride if you want to save your business.
The good ones are both financial AND operational experts. Small business needs both an infusion of cash and a series of new processes to drive the business (see the questions about strategy above). It can be tough to reach out for help when funds are limited. However, it is worth the initial cost and will help you weather the storm and turn around your business. These professionals can find funding, work out payment plans, make operations more efficient and relieve stress on the business owner and employees. The turnaround professional can help fix your business and you can focus on running the day-to-day operations. Ask your accountant and lawyer to help you find the right turnaround professional for your business.
- Michigan Department of Technology, Management and Budget – October 21, 2020
- New York Times – December 3, 2020
- Letter from Governor Gretchen Whitmer to the Michigan Legislator dated November 25, 2020.
- Politico – Katy O’Donnell October 18, 2020
- Website: cnbc.com/ Small Businesses Are In Survival Mode As The Covid Pandemic Drags On/ October 15, 2020
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