Small businesses need these 5 tips to stay afloat during the pandemic

5 ways small businesses can survive the pandemic this year

January 7, 2022 11:43 AM

Small businesses have fought tooth and nail for survival throughout the pandemic, and many fear that it’s going to get worse before it gets better.

Nearly 23% of small businesses in the United States claim that the COVID-19 pandemic had a large negative effect on business, according to an October 2021 survey conducted by database company Statista. In comparison, only 1.8 percent of respondents said that the pandemic had a large positive effect on their business.

We may not be out of the woods yet, according to Carissa Reiniger, founder & CEO of Small Biz Silver Lining, an insights platform for small businesses. But there is light on the horizon.

“There's going to be opportunity and carnage,” Reiniger says. “There's going to be any type of reality you could imagine. And the only thing we can have control over is how we respond to it.”

Small businesses faced a number of obstacles throughout the pandemic, including mass layoffs and closures during the first waves. Small business owners had many misconceptions on when the pandemic was going to end, leading many to overspend when they should have been saving, according to a survey of the Proceedings of the National Academy of Science. To this day, a large number of small businesses are still incredibly financially unstable — the average business with more than $10,000 in monthly expenses had only about 2 weeks of cash on hand.

Businesses that sought funding through the CARES Act were often met with bureaucratic hassles and difficulties establishing eligibility. And the months ahead may not hold the relief small businesses are looking for.

“[Small businesses] are going to have great days and bad days,” Reiniger says. “[They’re] going to have big wins and big losses. So how do they mentally prepare for that reality?”

Reinger shares her insight on the trials and tribulations ahead of small business owners and what they can do to keep weathering the storm.

Preserve cash

“The majority of small business owners are living sort of day to day, week to week, month to month,” Reiniger says. “A large company, however, has the benefit of probably billions of dollars in cash reserves. So if they have a terrible quarter or even two years where their sales go down by 30%, they can weather that storm.”

That means small businesses have to get serious about preserving cash where they can, Reiniger says. And they need to do it now.

“We've been advising small businesses to try to get out of leases, to go fully remote if they can, to downsize staff,” she says. “There's such an interesting conversation right now around staffing. We've got this great resignation conversation happening, we've got this labor shortage conversation happening, but we also have the reality that small businesses have had to make a lot of layoffs, which have been really hard for them and their staff because they haven't had enough revenue on money to support them.”

Act slow

“If you look at the cover of most entrepreneurship magazines and websites and blogs, there's this real culture of high-flying and charismatic thinking and making things happen by taking big risks,” Reiniger says. “But that’s not the true story of entrepreneurs.”

The worst thing a small business owner can do right now is act on impulse, she says. Instead, they should be keeping their head down and moving forward in a slow and steady manner.

“The majority of entrepreneurs start their day slow,” Reiniger says. “They meditate, they have coaches and advisers that force them to rethink plans and they stockpile cash for when things get hard — they are much more strategic than the current culture of entrepreneurship would have us believe.”

Small businesses, more so than enterprises, are likely to feel the pressure from what they see on the news and act on it out of fear of losing their business. But as hard as it may be to overcome, Reiniger advises to resist the urge.

“It really means trying to stay proactive instead of reactive,” she says. “Maybe this new surge is going to be a disaster, or maybe it's actually going to peak and go back to normal in February. Either way, don't react to it — just wait a minute.”

Communicate well

Communication is key, both internal and external. And it can lead to solutions that may have otherwise been overlooked.

For Reiniger, whose own small business’ revenue comes from other small businesses who utilize her programming, March 2020 was a scary time. So she gathered her staff, shared her predictions, and presented three ways they could proceed.

Option one: continue to operate as normal — see what happens and hold on as long as they can with their current revenue. Option two was to proactively lay some people off in order to preserve cash. Option three was to institute staff-wide pay cuts. Reiniger’s team unanimously voted for option three.

“If I had not communicated with my team, I might have made a choice that would have been worse than the one we made together,” she says. “Communicating with your team and being really transparent, open and vulnerable is critical — and the same goes for customers.”

If a business owner doesn’t have enough staff to open full time, a good strategy is to ask customers what new times they’d prefer. If a small business is experiencing a production problem, survey customers on their favorite products, then focus on those exclusively.

Focus on mental and physical health

“[Small businesses] are running on fumes,” Reiniger says. “We're going to see a lot more businesses go out of business in the next 24 months — not necessarily for financial reasons, but for burnout reasons.”

To mitigate the mental and physical burden, Reiniger has been advising small business owners and employees to prioritize their mental health in whatever way they can.

“If all you can do is go on a walk by yourself in silence [you should],” she says. “It doesn't have to cost a lot of time, it doesn't have to cost a lot of money, but it's critical that we build sustainable, affordable and consistent behaviors that will sort of be interventions against the burnout that we're all coming up against.”

Learn to adapt

This may be the most important tip Reiniger had to share, but it can’t stand alone — it all needs to work together.

“You can't be resilient and adaptable if you're exhausted,” she says. “And you can't be resilient and adaptable if you have $0 in the bank because you're in crisis mode.”

The key to resilience and adaptability, at its core, is the business owner’s mentality. There’s a difference between a “how” and an “if” mentality, according to Reiniger, and understanding them is critical to small business success.

An “if” mentality refers to making decisions based on whether something happens the way a business owner wants it to — if COVID cases get lower or if there were more customers. Meanwhile, a “how” mentality immediately asks the business owner to consider the best options currently available to them based on their situation.

“Good, bad, happy or sad, how [are small businesses] going to move forward?” Reiniger says. “How do they make my next best decision? How do they take what is true right now and what they need to be true and move towards that.”