Along with economic recovery plans, there comes some relief. However, every business owner can be confident in one thing – we live, work and manage uncertainty. As a “new normal” emerges, developing a post-pandemic business plan is paramount. We’ve seen the disruptive impacts of the pandemic as governments globally face the trade-off between public and economic health. It’s changed the way we live, work and conduct business and more challenges are expected. The second quarter Gross Domestic Product (GDP) is expected to shrink a phenomenal 30 to 35 percent annualized rate followed by growth in the last half of the year.
Below you will find some emergent trends and outlooks by small business Chief Executive Officers (CEOs) and a technique called “future-back” which can help us reposition as we emerge on the other side.
The Wall Street Journal (WSJ)/Vistage Small Business CEO Confidence Index dropped more than 50 percent in April reflecting the U.S. economic shutdown. The index had hovered in the 90 to 105 range since last October but fell to 41.7 percent. Nevertheless, the survey reflected a dichotomy of impacts, reactions and expectations.
Small and Midsize Business Statistics You Need to Know
Top Business Impacts
One third changed the products or services they offer
- Cancellation of travel and events (81 percent)
- Declining revenue (76 percent) – Majority (44 percent) reported declines of under 25 percent and a quarter reported no declines at all
- Market impact (60 percent) and employee productivity (57 percent)
- Delays in servicing customers (50 percent)
- Disruptions in supply chain (39 percent) and factories or offices in affected areas (35 percent)
- Increase in business and new opportunities (29 percent)
Concern of Inadequate Liquidity
One third of small/midsize businesses estimated having less than two months of reserves, 36 percent have three to five months, 17 percent have six to 12 months, and nine percent had over one year. As a result, financial assistance included:
- Payroll Protection Program (PPP) (90 percent)
- Line of credit via local bank (46 percent)
- Small Business Administration’s Economic Injury Disaster Loan (EIDL) (38 percent)
- Restructure/defer payments to creditors (29 percent)
Desire for a Stable Work Force
Sixty percent increased or maintained the same workforce, 17 percent of small/midsize businesses decreased by 10 percent and seven percent of small/midsize businesses decreased by 50 percent or more. Expectations over the next 30 days:
- Remote working (62 percent)
- Reduced hours or staff (30 percent)
- Layoffs or furloughs (22 percent)
- None of the above (17 percent)
More than half (52 percent) expect the economy to stabilize in six months, a third say six to 12 months, and 11 percent more than a year. Expectations about their business:
- Back to normal or stronger (38 percent)
- Moderately weakened by gaining momentum (48 percent)
- Significantly weakened and fighting to rebuild (14 percent)
One of the greatest surprises has been the speed of change. Major trends have steepened.
- Remote work/ telecommuting/ video conferencing – Remote work has increased 91 percent over the past decade allowing teams to work in the office, from home or across the globe
- E-commerce and digital payment
- Global supply chains need repair or new construction
- Healthcare delivery likely to change with telemedicine, wearable health monitors and more
- Digital media
The environment emerging post-pandemic may be very different. Some may see changes in their fundamental business model including services, assumptions, and how we care for customers. Now may be the time to prepare. Think about how Apple started its transition from the computer with the iPod and iPhone during the dotcom bubble.
Refreshing your business
Mark Johnson and Josh Suskewicz detail a process to help business leaders review and redesign their business in their book Lead from the Future. The major steps include:
- Envisioning your future – Where do you want to be after the crisis passes? What will be your core business? How will things change about customers, markets and operations? What won’t change?
- Reverse engineer – Their term is “future-back.” A benefit of working backwards from the future to today and developing business benchmarks and milestones is having a clear slate.
- Be prepared to learn and pivot – Anticipating and adapting to a changing world.
- Rally your team around your vision – Missions and margins are highly correlated.
In closing, we had two recent boosts. One was the announcement by Gilead Sciences about early positive results from a new coronavirus drug. The second was Federal Reserve Chairman Powell’s press conference which emphasized their commitment to deploying tools at their disposal in putting out the fires. May you too be successful in managing your challenges and emerging stronger on the other side.