What COVID-19 Has Changed For Small Business
COVID-19 has impacted nearly every business. Some effects are temporary, and others will be felt for years to come. Here are the changes I think will stick.
An emphasis on core values
Core values are an organization’s guiding principles that define their culture and the type of people/business they want to be. Well-written and well-defined core values serve as the foundation of a business. Businesses use them to hire, fire and evaluate employees, and refer to them when making big business decisions.
During times of crisis, core values differentiate companies that make it from companies that don’t.
The coronavirus pandemic has tested the strengths and vulnerabilities of every organization, its people and its core values. We got to see—good or bad—if team members really understood and lived the organizations’ core values by how they reacted under stress, pressure and uncertainty.
I think that going forward, companies will understand—if they haven’t already—that their values must be defined, talked about throughout the entire organization, and lived and practiced in every situation and circumstance. They will need to do this in order to survive future crises.
Businesses will have more liquidity on their balance sheets
Just prior to COVID-19, we enjoyed a 10-year macroeconomy in which businesses did well, improved their revenues and had little debt. But they didn’t have a lot of cash and liquidity on their business or personal balance sheets.
The natural reaction of business owners will be to add liquidity to their balance sheets. In order to do this, they will need to evaluate and possibly eliminate those products and services that didn’t have the margins needed to add liquidity to the balance sheet. I predict businesses will focus on offering those products and services they are exceptional at providing, and eliminate those they aren’t—so they see an increase of profit instead of revenue.
We will have creative destruction in businesses, services and product lines. At the same time, we will see windows of opportunity for companies to specialize in those things they do the best.
Awareness of weaknesses and opportunities for innovation
This virus has called attention to a whole set of problems we didn’t know we had. There were problems with our healthcare delivery system, virus management, and overall pandemic issues, among others. Because of that, we’ll be on the lookout for future problems and will be ready to innovate as necessary. Companies across the country have found interesting ways to reinvent themselves and bounce back from enormous challenges. They’ve demonstrated resiliency and have rethought their operations.
A better understanding of their full financial picture
So many entrepreneurs have made business decisions based on their profit and loss statements. The P&L only shows you what happened during the previous reporting period, not the money coming in and out of a business in real-time. Good operators will understand there are three financial statements that are important for understanding the full financial picture of a business: profit and loss, balance sheet and the statement of cash flows. Understanding all three of these financial statements will help companies respond to future crises.
Solidarity around ending racism in America
We can’t talk about the coronavirus pandemic without including the Black Lives Matter movement. While one was not a cause of the other, they did happen concurrently and are both considered a public health crisis. The countrywide mass protests were a show of solidarity, as well as an education of white America on the systemic problems black Americans face in our country. Small business owners will need to acknowledge it, listen to determine root issues, and work to find solutions that support all Americans regardless of color. There is no place in our country for racism. Small business owners will need to join other business leaders in promoting fairness and equality for all.
Small businesses have been shaken by the pandemic, but their spirit has not been broken. The changes and adjustments will only make them stronger and ready to face the next crisis.
How has your business been impacted by COVID-19? Share with us on Facebook, Instagram and LinkedIn!