COVID-19's Impact on Small Businesses: How We Can Help!
The global economy continues to sputter, and small businesses have been hit especially hard by liquidity challenges and sharp decreases in revenue and demand across the board. You can see all of that reflected in the fact that over a quarter of small businesses either already have or plan to lay off up to five employees, for example.
Clearly, in that context, accounting and finance professionals have an unusual mandate in their client engagements this quarter. Here's some information on how we are striving to continue to contribute value, no matter what comes next, and how you can in your business too!
We recognize how our client's business landscape has changed
The negative fallout from COVID-19 hasn't been uniform for small businesses, so we know it's critical to be attuned to the specific nuances of our clients' individual needs — and the environments they're operating in — with a significant degree of granularity before they come to us. By doing our due diligence, we can be far more proactive in the solutions that we bring to the table. A recent large-scale study from PNAS, drawing on insights from 5,800 small businesses to understand the impact of COVID-19 on outlooks and expectations, was a great resource for us to start to understand the complexities of what is going on. A few key takeaways from the study are summarized below.
Significant layoffs and furloughs, mandatory business closures, changes to compensation plans: Small businesses have already weathered all these and more, and they’ve almost certainly put contingency plans in place as well. The point is, small business clients are resilient and adaptable — less than two percent permanently closed on account of the crisis, according to the PNAS study — and we bring this same adaptability in our approach to solving any issues..
There's no consensus on how long this is going to last. Months? Years? Small business owners hold widely varying beliefs about the likely duration of the crisis, so we don't come to the table with one-size-fits-all accounting and finance plans.
While the vast majority of small businesses continue to operate, they're nonetheless fragile across the board. Of small businesses in the PNAS study with more than $10,000 in monthly expenses, for example, most reported only having two weeks of cash on hand. Shoring up liquidity to support business continuity is going to be a critical priority.
Small businesses owners are eager to seek assistance through the CARES Act, but many foresee bureaucratic roadblocks obstructing their path. You'll cement long-term partnerships if you can help expedite that process and effectively cut through red tape.
What are the Takeaways?
Leaders always rise to the occasion during moments of crisis — but the qualities that matter right now, and the qualities that mattered during, say, the The Blitz in London, are not one and the same. Namely, traits like honesty, transparency and ethical leadership are the principals on which we operate on and lend us to have the credibility we do with our small business clients, not stoicism and a stiff upper lip. So in this time of uncertainty we need to make sure we are keeping focus on the most basic of principals to keep our businesses going. The three most important are:
Adaptability: No one is immune to COVID-19-related disruption. We have struggled as a small firm during these times as well and we are using this experience to further help our clients succeed. We have learned many lessons and we emphasize the positive outcomes we have managed to achieve while navigating ongoing changes and adapting plans to your personal situation. The more you are able to adapt the more you can minimize the impact of this pandemic.
Problem-solving: The majority of small business owners think it's going to be another six months to one year before the economy rebounds, so let's be honest, many of us will be struggling with accounting and finance challenges of one kind or another. Start by addressing the most immediate pain points and work backward from there. We are always available to sit down and help just Contact Us!
Communication: These are stressful times for everyone. That's why when meeting with clients, we don't let technology be a barrier to communication. We have many ways of staying in touch that are suitable to anyone's comfort level or necessity. We are also here to help with clients' emotions by actively listening and demonstrating empathy which we feel counts just as much as the solutions we are able to put in place. You can also implement strong communication protocols across your business. This can only help improve your relationship with your clients and make your stress level decrease.
Hopefully, we can all leverage these strategies to collaborate and get through this crisis together. we can adapt and create creative solutions to keep everyone on a positive trajectory If we all continue to work together, we will be well positioned for success.