Running a business in the midst of a global pandemic can be challenging. According to a weekly survey released by the U.S. Census Bureau, 51.4% of businesses report a significant negative impact from the effect of COVID-19, and 31.4% anticipate that it will be more than six months before their business returns to normal levels of operation. If your business is suffering from the effects of the coronavirus, what are the prospects for the future?
How Businesses Have Been Impacted By COVID-19
It’s unlikely that recovery will be sudden and complete for most small businesses. In a recent interview, Joe Gavin, chief research officer for Vistage compared the potential recovery to an “upsidedown bell curve.”
In other words, the triggering event at the top of the curve took place when we first learned about the coronavirus. Subsequent events such as the shutdown of travel, the dramatic stock market fluctuations, and shelter in place orders from states have taken us further towards the bottom of the curve.
The slide to the bottom of that curve has been quite dramatic. The U.S. unemployment rate has soared to 14.7%, the highest rate since the Great Recession. According to Business Insider, over 99% of all U.S. businesses are small businesses, and most lack the liquidity to withstand even a 30-day interruption. And there is also the potential for a “startup depression” in which entrepreneurs avoid entering the market due to the pandemic.
When there are fewer new cases of the virus and states begin to re-open their economies, Gavin indicates that the curve has reached its “bottom.” It’s unclear whether we are there in the U.S. or not due to the potential for a second wave of infections.
How Will Businesses Recover from COVID-19?
As businesses struggle to deal with being towards the bottom of that curve, and even when the situation begins to improve, what is the best strategy to ensure survival? According to Gavin, having a strong investment in outsourced technology and other resources can help. For example, businesses that are too tied to a brick and mortar location are likely to struggle more than those that can operate more nimbly using technology and strong business partners.
Further, having adequate cash on hand and cashflow is essential. Even in normal times, these are vital business strategies, but during an unexpected crisis, they can mean the difference between survival and closing up shop. The government has provided some relief through the CARES Act, but businesses can look for help from the SBA or local banks, different tax credits, and assistance locally as well.
Finally, the way that your business steps and up and treats its own customers during a global health emergency will be noticed and won’t be forgotten. For example, some businesses are taking advantage of struggling consumers with unjustified price hikes and a refusal to honor agreements. Others are doing what they can to be of service to their customers and their communities. If you can be one of the latter, this can play a factor in how fast you recover and even thrive after COVID-19.
Nolan Accounting provides accounting, bookkeeping, payroll, and tax preparation services to small business owners throughout Southeast Wisconsin, including Milwaukee, Greenfield, Muskego, New Berlin, Waukesha & West Allis. Contact our office today to learn more about how our services can help your business emerge from the current situation stronger and more successful.