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What to think about when you’re thinking about reopening your small business
Rebecca Braun is currently studying for her MBA at Harvard Business School, Class of 2021 and interning for the summer with ICIC.
Across the USA, states are lifting stay-at-home orders and allowing businesses to re-open their doors. For the small businesses which have temporarily closed since March and for those that have partially closed, this creates an inflection point—a moment of dramatic change and big decisions. There is no precedent for this type of economic closure, much less reopening and recovering from it. Some businesses have begun reopening already: according to Opportunity Insights, the number of small businesses open increased by 19 percentage points between mid-April and the end of June, but remains 13% lower than January.[1]
For those which remain temporarily closed, it is of course imperative to follow all relevant regulations, but beyond that, what is the best way to proceed?
Of course, there is no single right answer. Every business has their unique strengths, weaknesses, opportunities, and threats. However, federal, state, and local governments, journalism, academia and
nonprofits—among others—offer many guides to help. Here’s a roundup of some of the most important considerations as you make the decision, plan, prepare, and ultimately reopen your business.
Deciding to reopen
Allow yourself the time and space to make thoughtful choices. Decision making is always challenging, but psychology research has shown this difficulty to be exacerbated by stressful conditions[2] (like a pandemic or a recession) and psychological pressure.[3] So take your time when deciding whether to open in the near term, sometime in the future, or—should it be the right choice for you—to close permanently.
Start by taking financial stock of your business, if you haven’t already. Ask yourself:
- What are your costs? It can be helpful to separate costs into those that are fixed versus flexible. For any kind of cost, including rent, see if you can renegotiate to lower the burden. For those that are flexible, if you need to cut them, it’s better to do so earlier than later. And, be scrappy!
- What are your current and expected revenues? When thinking about your expected revenues, be realistic and consider multiple scenarios—from worst-case to full normalcy by November or December.
- Using those, what is your cash flow? If you’re facing a gap, what resources do you have available? If you’re facing this difficulty, you’re not alone: the majority of companies are cash strapped and had less than two months of cash on hand at the beginning of this crisis.[4] The Paycheck Protection Program (PPP) deadline has been extended to August 8th (with $134B remaining as of July 1st) so that remains an option.[5] ICIC offers a curated list of potential sources and free webinars on its Small Business Resource Center; other organizations have offerings as well. You can also check your local city, county, and state government websites, chambers, and business associations, as well as some large private companies.
Gather as much information as you feel you need. It’s critical to understand your state, local and industry-specific reopening regulations. Many federal government bodies also offer resource guides and free webinars, including the U.S. Chamber of Commerce, Center for Disease Control, and OSHA.
Consider which factors matter in your decision and gather information about those. A starter list of considerations might include[6]:
- What are the health risks to you, your employees, and your customers? (This may depend on type of business and physical proximity required, risk tolerance, and coronavirus caseload in your area.)
- What is the status of your supply chain or vendors? (Are they open? If not, can you find either temporary workarounds or permanent replacements?)
- Will you have demand? (Are your customers there, whether individuals with the confidence to come and dollars to spend, or other companies reopening?)
Under any circumstances and especially under today’s heightened uncertainty, it is impossible to have perfect, complete information, so don’t wait for that. Instead, learn as much as you reasonably can and choose a path forward. That choice is usually not irrevocable; you can change course if and when the unexpected happens.
Planning to reopen
Once you’ve decided if and when to reopen, it’s time to come up with a detailed plan—and contingency plans—because reopening does not mean restarting the same old thing from before.
Pivot, adapt or innovate—however you want to phrase it, it is both a difficult necessity and an exciting opportunity. As Hong Luo and Alberto Galasso recently put it in Harvard Business School’s Working Knowledge, “Amidst these massive disruptions, a combination of short- and long-term innovation responses can provide a ray of hope for businesses.” Innovation can come in the form of new products or services for your customers, new digital tools being used in your business, new ways of working with your team, or any number of other guises. You might find inspiration in the Stories of Resilience found on ICIC’s blog, New York Times’ recent series For Small Business, It’s All About the Pivot, or any number of other places where these amazing stories of success—and of resilience in the face of failure—are being told.
Those adaptations will likely be needed in both your business model and also your operations, in this rapidly changing world of coronavirus.
“Pivot” your business model to changing context and customers.
- Get to know your customers all over again, and re-evaluate your product or service offering. Your customers have likely been as deeply affected by COVID-19 as you have; their needs and wants, behaviors and habits have all shifted. Learn as much as possible about those shifts from public data and by engaging directly with your customers. Use that knowledge to message, adapt, or even reinvent your offering; without relevance, you’ll have no or low demand when you reopen.
- Devise a marketing strategy that will reflect your updated offering and respond to your customers’ new needs.[7] It can be helpful to look at your local or regional competitors and examples of other businesses, to get a sense for what is and isn’t working.
- Take a second look at your competition. Some businesses are using this as a moment to change how they interact.[8] Could you shift that relationship to one of collaboration? Could you form a strategic partnership, pooling resources like employees or equipment[9]—or maybe even employee childcare?
- Understand the budget and revenue impact[10] these business model and operations changes will have. As needed, fill temporary financial needs using the resources you explored in your “decision” phase or identify new ones. Increasingly, public sources of funds are becoming available for short term reopening needs.
Update all your business operations to align with your business model and informed by the customers, context, and competition that you’ve already explored.
- Your space: Construct the physical changes necessary to follow relevant regulations and social distancing guidelines, such as physical barriers or layout changes. You might also need new signage to explain changes and assuage customers’ concerns.
- Your equipment and tools: These might be physical equipment, like cashless payment, an outdoor “pickup rack,” and safety seals on pickup packages, to build customer confidence in your business’ health and safety. They might also be digital tools that help promote, manage, or grow your business. Research by Deloitte indicates only 1 in 5 small businesses are digitally advanced, and they earn twice as much revenue per employee in addition to higher revenue and employee growth. One helpful resource could be Connected Commerce Council: C3 and Google are offering free tools and trainings to help small businesses. Examine the four areas where the biggest digital changes are happening—telecommuting, on-demand food and services, virtual events, and the cloud—and decide if those are changes that make sense for your business.[11] While few small businesses may need to take it to the extreme of a full “digital transformation,” looking at those changes and reading through Blake Morgan’s 12-step plan might spark some ideas that work for you. Take advantage of technology, but don’t forget about cyber security to protect your business, employee, and customer data!
- Your team: If you have employees, they need to be on board and ready to go even before the business is fully re-opened. Do you need to re-hire previous employees, hire new employees, or maintain your current employees? Will they be part time or full time? Once you know how many employees you expect to need and the timeline to bring them on, consider their location. Do they need to be in-person, or can some or all work remotely? If they are in-person, you will need new processes for monitoring wellness and health; follow the most up-to-date guidelines and regulations, which may include providing PPE, checking temperatures, conducting daily “symptom surveys”, offering testing, and more frequently cleaning and disinfecting. Think about other policies as well, like sick leave to avoid spreading illness among your team, and shift changes to have fewer employees around at any one time. These policies, processes and procedures can help keep your employees safe and also build their confidence in you and in coming to work, but they may need more support. Engage your team and communicate honestly and transparently; you might hear new ideas for improving the new business operations, or what support they need to be good employees. A lesson learned from businesses reopening in China is the value of transparency, especially to your employees; though it is rarely easy, being clear about your values and decision process can help build buy-in.[12] Earning your employees’ loyalty and trust in challenging times is a worthwhile investment.
- Your supply chain: As you have already explored the current status of your supply chain in your reopening considerations, you probably know whether your former suppliers and vendors are open for business. If they are, do they meet any new requirements you have and will you maintain those relationships? If they aren’t open or don’t meet your new needs, what alternatives do you have and how will you select from among them? What new challenges and opportunities does your business face in getting its inputs?
- Your processes: Finally, reflect on the way you get business done, including your systems for quality control, learning, and improvement. Are more changes needed?
Establish an implementation plan and timeline. You may have identified a lot that needs to be done, and it probably feels overwhelming. Rather than trying to do it all at once, break it down into bite-size pieces (maybe along the categories we used above, or some other organization method that makes sense to you). Establish what decisions and actions are needed, and in what sequence, for each category. Delegate those decision and actions thoughtfully, and write down the owners in your master plan. Set deadlines (realistic ones) so you can keep your reopening schedule on track.
Finally, communicate and engage with your stakeholders about the business model and operations changes. Your employees, customers, suppliers, lenders, and/or any other groups of people who might be involved in your business will want to know what’s going on. As the US Chamber put it: “As part of your post-COVID-19 communications, you’ll need to set clear and accurate expectations with those who interact with your business. Your employees, customers and vendors will need to know what to expect from you as you execute your reopening plan.”
Preparing to reopen
Now that you have a new plan (and preferably a handful of contingency plans as well), it is time to set it in motion.
Check in (with yourself and those to whom you delegated) regularly to stay on track with the plan.
Begin executing your marketing strategy. Customers won’t show up magically when you reopen (or at least, you may not want to count on that). Tell existing customers when you’re open for business and what changes to expect in your offerings and your operations. Entice new customers.
Get your team ready. Train them on all the changes you’ve made—for the business, for them, and for customers. Create opportunities for them to practice the “new normal” and create new habits. Take this opportunity to hear their feedback and make improvements on your plans.
Reopening
Continue executing your plan, and changing it as necessary. The big day comes and you open your (physical or metaphorical) doors—but don’t think of this as The Moment Of Truth. This is just the first experiment, the first in a long series of opportunities to tinker with and improve the business model and operations that you and your team have begun working on.
Consider whether a pilot or limited reopening might help your business to experiment with your new business model and operations while limiting the potential downside.
Continue to communicate clearly with all your stakeholders—and make sure that the communication goes two ways. For example, get feedback from your customers and input from your team. When you get feedback, respond so that the person who provided it feels heard and valued.
Track the data to help you figure out what is and isn’t working. What data makes sense for you might differ, but this could include sales data, customer behavior, and ROI. Don’t expect those numbers to immediately be at pre-COVID levels, but watch trends.
Be adaptable. Inevitably, things won’t go as planned. You’ll hear unexpected feedback, or the data will show that something isn’t working, or a new rule will be established. With the spirit of adaptability, that doesn’t mean failure—it means more opportunities for improvement!
ICIC wishes you the best of luck on your re-opening journey!