The damage that COVID-19 and the quarantine caused are undeniable, we can already see what it’s doing to the economy. We are seeing small businesses disappear, large companies declaring bankruptcy, and many others struggling to survive.
In this new economy, the motto seems to be: adapt or stay behind.
In this article, we will discuss:
- The drop-in-consumption crisis is inevitable, and its effects will probably be visible during fall.
- Businesses must start going digital to remain competitive.
- Understanding new customer needs is vital to growing a business.
- There will be more loan requirements and restrictions but also more options for small and medium-sized businesses.
- The importance of not panicking and listing our business’ next steps.
The New Economy: Its Challenges and Opportunities
The economy is like a house of cards; you need all the cards for it to be complete. The country, the world, all businesses, and all customers are all different cards. And if you’re missing one, everything falls apart.
For example, the income of a country needs consumption (people spending), government spending (electricity, water, lighting, bureaucracy, etc.) and what it exports. If people earn less money, they can’t spend, and then the government collects less. It’s a chain reaction.
The decrease in consumption that coronavirus caused, its not so noticeable (yet) because of all the government stimuli. However, if the economy remains closed for a longer time (and it will happen the longer we need to quarantine to flatten the curve), the more serious the crisis will be for small and medium businesses. This is explained by Harvard professor and economist Ricardo Hausmann.
The longer the lockdown lasts, the number of businesses closing before next year will grow. Additionally, many other companies will see losses if they are only allowed to work at reduced capacity.
How can I protect my business during the new economy?
One strategy is to anticipate the drop in consumption and increase your cash flow with the help of a loan.
The ability to have money today allows us to invest tomorrow. And this helps us prepare our business for future changes.
A loan can help many businesses overcome the economic crisis when the drop in consumption impacts the economy.
The way we used to do business might never come back. Many businesses will not be able to reopen, and some jobs won’t be restored. Fortunately, it is estimated that in the United States, more than 70% of the population has a smartphone.
You’re likely wondering, “What do smartphones have to do with the crisis and my business?”
Having access to smartphones gives customers the power to stay at home safely, and that gives digital businesses an advantage. Whether it is through an eShop or by offering online services, businesses can strengthen themselves by migrating part of their operation to the internet.
Digital consumption will continue to grow exponentially. You have a wide array of options, not only online purchases but also advertising on social networks and content marketing. Businesses need to be ready for this new trend.
What is the best way to migrate my business to the internet?
No business should be left behind, so we recommend reviewing these valuable articles that will help you grow your business online:
- Join the digital revolution by opening an online store
- Learn how to use social media to promote your small business
- And don’t forget the importance of content marketing
The smartest thing you can do when it comes to planning your business’ future and adapting to the new economy is going digital.
3. New Opportunities
The crisis caused by coronavirus, unlike many others before it, wasn’t caused by a crash in the stock market or a failure in the financial system. Quarantine is what caused this crisis. And although we should remain optimistic, we also need to be pragmatic and know that many changes will be permanent. There’s no doubt that a new economy is ahead of us.
When the market reopens, it will be different; even customer needs will also change. This also gives us many opportunities to grow.
How can I adapt to the crisis?
To adapt to the new normal, we need to understand it first. The fall in consumption and the crisis are great opportunities to create and develop new services. Customer needs might have changed, but you can also change and adapt.
For example, a business that used to offer office cleaning services might start offering new services: home and business cleaning and disinfecting. Another example could be a parcel delivery business that could partner with local restaurants and markets to provide home delivery.
For every change in the market there are new customer needs. It is important to understand what these needs are and how we can adapt to them.
During the coronavirus crisis, some banks have increased their mortgage requirements. These restrictions might also affect personal and business loans, making it harder for people to apply.
On the other hand, some people and businesses won’t be able to pay their existing loans, which could generate a vicious circle: people can’t pay because banks don’t lend, and banks don’t lend because people can’t pay.
While the government and banks are concerned with the well-being of large-sized companies and corporations, it is necessary to pay attention to small ones too. Most traditional loan models are not designed to cater to small businesses. Fortunately, many other models can help small businesses.
How can I get a loan for my business?
It is crucial to understand and know which financial institutions can grant you a loan. It’s also essential to know their requirements beforehand to know which one is the best option for your business.
At Camino Financial we believe that the best way to strengthen the economy is to create a market with equal opportunities for all.
5. Plan Ahead, Don’t React
It is proven that humans don’t make sound financial decisions in times of panic. Why? Because when we are stressed, we are more likely to make bad decisions.
Nowadays, it’s easy to get overwhelmed by all the news. The media and news outlets are filled with alarming messages: death tolls, businesses going bankrupt, new economy, unemployed people…
How can I make better decisions?
Before deciding the direction you’re going in, it is essential to ask ourselves where do we want to go? Different goals have different paths.
With a defined path in mind, you can make a list of all the activities you need to complete to keep afloat. Some concrete actions that can help your business are “1. Renegotiate income, 2. Ask for a loan, 3. Offer home deliveries”, of course; these will change depending on your business and your goal.
It is important to keep yourself optimistic. Remember, the economy will recover, it’s just a matter of time.
Together We Are Stronger
We believe that one of the best tools that we all have at our disposal is togetherness.
During these tough times, and the new economy ahead of us, there’s strength in unity: if we help each other, we can survive this.
To help small businesses, we have prepared an information hub that can be useful during this crisis. You can find it here.
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