March 24, 2020
Weathering adversity
(photo by Cliff Hollis)
In North Carolina, 99.6% of all businesses are small businesses: construction, service, retail, health care and agriculture. According to a recent College of Business post, these businesses employed more than 1.6 million in 2015.
They provide much of the employment, economic growth, and wealth creation in the state’s economy. North Carolina businesses have weathered many storms literally and figuratively through the years. In my experience, I’ve witnessed lines of citizens who needed help snake around a community SBA disaster headquarters seeking relief loans. I’ve helped friends gut buildings that were underwater from floods. However, the current social distancing protocols are unprecedented in recent history.
The COVID-19 pandemic is affecting almost every business in some way. There are a number of questions that have no answers. How long will this last? What will be the severity of the virus’ impact? How will the government respond?
Magus Pereira, MSOE alumnus, developed a wifi-based solution that could help first-responders find people caught in a natural disaster.
With my experiences, I’ve seen small businesses position themselves for success following natural disasters. Their size allows them to be more agile than larger organizations, and when an event occurs, small businesses have demonstrated four key traits that helped ride the wave of uncertainty.
Innovation: Any disaster will demand a shift to different types of products and services. Small businesses should evaluate their current offerings and determine which new, in-demand products and services are easiest to add. In-demand offerings may not have enough supply. There also may be opportunities for brand-new offerings that better meet a particular need. Note the Durham distillery that’s converting alcohol into hand sanitizer.
Channels: Traditional face-to-face channels are not effective in today’s COVID-19 environment. Small businesses should look at investing in online sales channels. Recognize disruptions to online sellers like Amazon and capture their customer base. If you are a seller through a platform that is experiencing a disruption, attempt advertising directly to the consumer through social media and Google ads.
Costs: Only half of the small businesses have enough cash reserves to continue operation for one month with no cash inflow. Expenses must be cut quickly if facing even a medium-term sales disruption. Some ways to consider cutting costs would be to cut labor hours, reduce the production of inventory for items experiencing reduced demand, or going to a shorter workweek to save on utility costs.
Marketing: Now could be a good time for small businesses to see marketing is indeed a necessity and not a luxury. Utilize your marketing channels (website, social media, et al.) to communicate the status of your company. Showing empathy and being forthright with how a company is reacting to today’s events is critical.
Resources are available for eastern North Carolina’s small businesses. North Carolina’s Small Business and Technology Development Center continues to offer counseling services to help companies with difficult decisions. Community Colleges also provide business counseling through their Small Business Center network. The recent disaster declaration makes Small Business Administration direct loans available to small businesses that have experienced an adverse economic impact from the disaster. In the coming weeks, the Crisp Small Business Resource Center will take a deeper dive into innovation, channel switching and cost cutting. We will share this expertise via the College of Business’ social media channels. Let’s dialogue there and share our challenges and questions.
North Carolina’s small businesses will continue to adapt, survive and thrive. Be proactive, make changes when needed, and seek assistance.
We can weather this pandemic.
David Mayo
David Mayo is the director of the Crisp Small Business Resource Center and an instructor in the Miller School of Entrepreneurship. He has worked directly with small businesses in eastern North Carolina through six disaster declarations. Mayo has assisted with the development of multiple new technologies, helped businesses raise $30,000,000 in capital, consulted with more than 400 companies, and sits on two startup board of directors. He also is a small-business owner, running two businesses in the Greenville area.
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