“Steve, I need this project finished by EOW.”
“End of the week?”
“No. End of the World.”
*Pause* “That was sarcastic? Right?”
Mayan math teachers either didn’t do their job well or their lead priest had ADHD because 2012 should have been 2020. People’s realities have changed, and small businesses have been hit especially hard during these…wait for it… “uncertain times.”
70% of small businesses are worried about financial hardship because of prolonged closures and 58% worry about permanently closing. Raising capital is the #1 problem for SMBs, according to a survey by Guidant Financial.
Since raising capital is kinda our thing, we’ll start our survival guide there.
#1. Find the right path and the right resources
Before you chase new capital for your business, figure out how much you need. No one can see the future, but you need to look at your current situation and how long you see the current conditions lasting into the future.
Once you settle on an amount (or more likely a range) then we can talk options.
If you’re one of the chosen few who received all you needed in government aid, congrats! For everyone else, here are a few places to look.
- Look at the debt you already have. With interest rates at an all-time low, you may have refinancing options that give you immediate resources without creating an oversized interest issue for yourself down the road. Other options may include delayed or interest-only payments on your existing loans.
- Outside of traditional loans, SBA loans can be a great way to access low-cost capital. The downside is that the paperwork can be lengthy and thanks to COVID, the competition for these loans has soared. If you’re able to secure one, though, they can be worth it. Ask your banker about SBA loans while you’re covering your other options.
- Unless you know some benevolent millionaires, crowdfunding (what we term “microinvesting”) is a powerful way to connect with a large group of online investors. At Vicinity, we take it a step further by connecting business owners with investors local to their community. Why? Because we believe that investors will be more aligned with businesses they know and care about. In addition, they get the added benefit of owning a real stake in local companies and possibly seeing returns. This option to invest locally is like the superpower communities didn’t know they had.
While local investors and business owners are doing karate in the garage, let’s move on to our next survival tip:
#2. Retool for the journey ahead
Okay, yes, everyone talks about pivots, but HOW do you pivot, and to what? The key to pivoting as an SMB is understanding where your customers went when they left you. Not to rub salt in the wound, but they are likely still out there (or maybe in there) spending money. The key is to understand how their needs and wants have changed, leading them to stop buying from you.
The second part of the pivot equation is asking yourself what it takes to solve the new problem that your customer has and how your business needs to change to create that solution.
For example, are you familiar with CrossFit? It’s a fun way to torture yourself with high-intensity fitness. When COVID-19 hit, CrossFit gyms had to close, but what many of them ended up doing is renting out their inventory to gym members. It was a brilliant way to shift their strategy based on circumstances and still fit the needs of their customers. It’s a matter of retooling. Leverage the strengths of your business and build solutions around your existing capabilities.
You may need to restructure your business over time as the market demands. But as you “retool” you can build towards those products further outside your wheelhouse without losing what your business does well.
#3. Research & learn
There is no real survival guide for the end of the world, or in this case, a pandemic. The best playbook is the one you create for yourself. What are small steps you can take to 1) stay ahead of the competition and 2) create sustainability? Try to start with:
- Having deliberate conversations with your customers
- Research your competitors in the market you’re currently in or the one you’re pivoting to
- Listen to what you’re hearing in your industry
- Come up with something that makes you stand out from the noise (this goes with retooling)
Our world is faced with hundreds, if not thousands, of problems that didn’t exist 6 months ago. Maybe it’s a little late to invent Zoom and you probably won’t take out Grubhub, but there are all sorts of problems that haven’t been solved yet. This isn’t to say abandon ship, but it is an exhortation to think outside the box and make sure you’re well informed for the future.
In this survival guide, one theme is certain: your local community is the key to your survival. Whether you’re learning about new problems and needs, adapting to solve those problems, or tapping your neighbors for life-giving microinvestments; knowing and owning where you live is the best way to ensure you make it out alive.