Some Small Businesses were pushed to the brink those that survived made several strategic changes to do so
The Rochester Area Economic Development, Inc released their most recent quarterly economic report which showed very positive economic recovery for this area. However, after 2020, countless small businesses were pushed to the brink and some did not make it and others were able to survive. But those that survived made several strategic changes to do so. Although recent experience shows that the pandemic is not over yet. The good news is that small businesses are starting to feel more optimistic about their chances in 2021.
But that's also leaving many of them at a crossroads. For some, a rapid shift to eCommerce and other non-contact sales methods was essential to stay afloat. Now that those measures aren't strictly necessary, the question is how to either unwind them or make them a permanent part of the business's strategy. My suggestion to CEOs is to take it slow when it comes to getting rid of those changes and switching back to the pre-pandemic operations. If the changes that brought you through those hard times were helpful, at least take the time to analyze where you take your business going forward.
Andrej Kovacevic, an entrepreneur, a digital marketer, an avid internet technologist, and a SCORE resource partner gave some great advice related to this topic and shared them on the SCORE website. I share some of his thoughts here.
Create a cost/benefit analysis:
The first and most straightforward way to see if your pandemic-driven business changes are worth retaining is to compare them dollar-for-dollar with the pre-pandemic status quo. The trick to doing this correctly, however, is to try and separate out the cost of the transition itself so you can examine the relative merits of your pre-and-post-pandemic operational methods.
There's a lot to take into account to complete a cost/benefit analysis, so it pays to be deliberate and take your time. In this case, a good place to start is to compare your business's Q4 2019 results with Q4 2020. This should give you an apples-to-apples comparison from before the pandemic's effects set in to a similar period after you'd modified your operations. That will also help you filter out the transition costs (like setting up an eCommerce front end, transitioning to digital payments, etc.).
On the cost side, be careful to only include savings that would continue if you made an operational change permanent, like reduced office space. Be careful to control for pandemic-driven cost decreases, like if your car insurance costs dropped, as they may be the result of temporary rate reduction programs and other givebacks.
Ask your customers:
For every change that was a net benefit for your business, you must next measure what impact it had on your customer base. This is a critical data point to include in your decision-making. That's because you need to be certain that your customers will be willing to continue patronizing your business if you don't revert to your pre-pandemic operational style.
Depending on your particular industry, you may find that your customers expect (or even insist) that you go back to operating as you did before the pandemic. If a significant percentage feel that way, the rest of this exercise is moot. But if a large majority seem comfortable with the changes you've made, that's a good sign that you should consider keeping them.
Consider non-monetary impacts:
You should also consider the non-monetary costs of making your operational changes permanent. For example, have you laid off or furloughed long-time employees who would become redundant if you don't resume normal operations? If so, you may wish to consider their well-being before making drastic permanent operational changes.
In some cases, you may even have contractual obligations to certain employees that might complicate your decision and make it not worth pursuing. You also might want to make room for some (or all) of your pre-pandemic staff in your new operational structure. That might require skills retraining or other accommodations to accomplish, which you'd need to consider before making any decision.
Consider your future growth prospect:
Think about how your choice might affect your business's long-term growth prospects. For example, if you're running a storefront that was competing with other local retailers before the pandemic, but is now going head-to-head with eCommerce giants like Amazon – that may become a deciding factor for you.
That means you're going to have to revisit your original business plan to see if your market and competitor research is still relevant to your new modes of operation. If they aren't, you should go through the process again to see if your business has a decent chance to compete and thrive under its new conditions.
It may turn out that your business would be better off going back to its pre-pandemic model because its growth path would be clearer. Remember, significantly altering the way your business functions is a bit like starting a whole new business. The extraordinary nature of the pandemic may have given you a false perception of your business's prospects for success when things return to normal.
Whatever you decide, however, you should draw some confidence from one simple fact: If your small business has made it through the worst of the pandemic, you've already succeeded. And using the same dedication and energy you've displayed throughout 2020, what you do from here will have an excellent chance of success.