This year has been a rough one, especially for business owners.
COVID-19 has been affecting all industries and all markets. We’ve lived through quarantines and lockdowns. Sales and profits have taken a dip.
Now, a new wave of coronavirus cases is slowly growing. This will only mean that the government will have to impose new restrictions to stop this from getting out of hand. Some call it a second wave. Some call it a third wave. But we’re calling it the winter wave.
Your industry, how resilient you are, and what preventive measures you take will affect how the winter wave affects you. And even if there’s a vaccine fastly approaching, there will be a long curve until businesses can get back to “normal.”
The good thing is that, after surviving the first wave, you already know the rules of the game. But most importantly, you can learn what is expected of this so-called winter wave and prepare accordingly.
In this article, you’ll find a forecast for small businesses so you can be ready for the winter wave.
The impact of COVID
Small businesses in all states and industries have felt the effects of the pandemic, though, some more than others.
You need to understand how your industry is being affected. This will give you a forecast of what’s to come and allow you to get your business ready.
Nada Sanders, professor of supply chain management at Northeastern University, says: “Although smaller companies and start-ups were hit hardest by the crisis, some actually prospered.”
In truth, while it mostly depends on your industry, it’s also important how you solve problems. Not all business revenue has been affected in the same way.
Let’s see how the average revenue per industry has been affected by COVID-19, according to Womply.
For example, the transportation and parking sectors were some of the most affected. This is a direct effect of stay-at-home orders and quarantine restrictions. If people can’t go out, they don’t need to use public transport or leave their vehicles in a parking lot.
Or look at the arts and entertainment industry, because of the restrictions imposed by local governments, places like movie theaters had to close, and their revenue got the short end of the stick.
Of course, closures affected different industries in different ways since the pandemic started. During the winter wave, these same industries will most likely be affected by closures again (if that’s your case, you can start preparing and migrating online!).
In this graph, we can start seeing the trends of industries that are closing again.
On the other hand, other industries have been thriving. The most obvious one is the healthcare and medical sector. Of course, other basic-needs industries have also thrived.
There are other sectors not mentioned in the graphic that are also thriving. Like cleaning services, which had a surge of demand during the pandemic: the need to clean and disinfect surfaces is now the new normal.
You can use this information to your advantage.
Take a look at Cristina Uribe. Her home cleaning business was being incredibly successful at the beginning of the year. Then the coronavirus pandemic hit the US.
At first, clients were scared and didn’t want anyone to go into their homes, not even to clean. So Cristina decided to start researching to find the best products to clean, disinfect, and kill the COVID-19 virus. She emailed all her clients to let them know of all the measures she was taking and what products she was now using. Now, slowly but surely, she’s seeing a surge in interest in her services.
Consumer spending varies by need
But there’s another thing that you need to pay special attention to: consumers.
Yes, many industries have suffered because of the government’s quarantine restrictions. But consumers are also another major force behind how different sectors are faring.
It’s crucial that you understand how the pandemic affects customers and their shopping trends in your specific industry.
For example, let’s look at the arts and entertainment industry. We already mentioned that because of quarantines, this sector took a big hit. But in most states, movie theaters, for example, have already reopened. So, why are their numbers not going up?
The truth is that many people still feel wary of being inside a closed space with so many people around for an extended period of time, no matter what type of measures theaters are taking to keep people safe. In this case (and many others), customers are the deciding factor.
Here’s a graph that shows how clients’ spending habits have been changing since the pandemic started.
As you can see, most industries took a dive, and while numbers seem to slowly be getting back up, most are still not back to where they were.
In other cases, total spending shot through the roof for no apparent reason (at least market and finance wise). This goes to show the power that consumers have and how their spending habits can affect businesses, both positively and negatively.
So you should take a look at how your consumers’ habits have been changing since the pandemic started. This can give you a clear roadmap of what you should do next.
Are there any relief or recovery funds coming?
The first stimulus package created by the government was a HUGE aid for Americans.
The PPP, while it didn’t reach as many small businesses as it should have, helped many others survive during the beginning of the pandemic.
The stimulus check gave citizens very needed financial help.
But times haven’t improved as many wished, and the need for more aid has been steadily rising. Fortunately, we expect a second stimulus from the government. And now that the government knows the strengths and weaknesses of the first round, they can create an even better second package.
And while it has been taking too long for this new aid to be created, as of today, a bipartisan $908 billion plan that will address the relief Americans need. Of this total, $288 billion will go to small businesses through programs like the PPP. (It’s important to notice that there doesn’t seem that a new stimulus check is part of this plan.)
Hopefully, this time around, the money will be better organized to reach black and brown communities.
Consider other incentives that are available from non-profits and other organizations that are developing private funds.
The vaccine: when will it arrive?
Of course, this COVID forecast wouldn’t be complete if we didn’t take into account the current COVID vaccines. Right now, the most promising are 2 of them:
- Moderna: 94.5% effective (needs to be stored at -4°F)
- Pfizer: 95% effective (needs to be stored at -94°F)
The FDA has issued an Emergency Use Authorization (EUA) for both the Pfizer and the Moderna vaccines.
An Emergency Use Authorization (EUA) and a vaccine approval are different types of processes.
Why has the USA approved the vaccine so fast?
You see, the U.S. Dept. of Defense created Operation Warp Speed to accelerate the regular 73-month period that starts at research and ends with the distribution. The accelerated process will only take an astounding 14 months.
But how will the vaccine be distributed? Who will get it first?
The CDC recommends that the 21 million healthcare workers should be the first to receive the vaccine during the first phase. Long term care facility residents will also be vaccinated during this first phase.
When will the vaccination begin?
They have already begun. The first person in the US to get a vaccine was a nurse at Long Island Jewish Medical Center on December 14.
Keep in mind that no more than 22.5 million Americans will be able to receive this first round of the vaccine (as that is the amount of vaccines Moderna and Pfizer will have ready). This means that the government will have to prioritize members inside these 2 groups.
After that, during a second phase, essential workers will be the ones to receive the vaccine. This means people in the education, food, and agriculture, utilities, and transportation sector, as well as the police, firefighters, and corrections officers.
During a third phase, it will be the turn for adults over 65 years or with high-risk medical conditions.
Keep in mind that these are CDC recommendations, your State might have a different vaccination plan.
What about the general public?
Most likely, everyone else will be able to receive the vaccine by May or June. But it is important to note that children are still not eligible to be vaccinated as pediatric trials are still in the early stages.
Strengthen your business during the winter wave
To improve your outlook for the winter wave of COVID-19, we want to share 3 amazing tips that will help you thrive during what’s to come.
1. Narrow your business value proposition
This advice has been repeated over and over again, but that’s for a reason: it works.
The winter wave will require you to lower your fixed costs as much as possible. How can you do this?
By adapting your business.
During the winter wave, you need to make sure you have good customer retention. How can you do it?
Identify what your clients really are interested in and are actually buying (remember, customers have a lot of power regarding the increase and decrease of revenue). Narrow your offerings and focus on just the best-sellers. By having fewer offerings, you can ensure that you’re actually selling the products or services that your clients actually are willing to buy during these times.
So, make sure you review your inventory to only have the essentials you need to meet your customer’s needs.
This will also allow you to maintain a healthy cash flow.
“We’ve seen restaurants that are small and financially strapped focusing on carry-out and delivery, and that requires a certain change in operations, but it’s also meant a narrowing down,” explains Nada Sanders.
2. Keep Cash Free and Credit Open
Cash is king. That is true during normal times, but during this pandemic, it has become undeniable.
We recommend you not to invest all your cash. While you do need to spend some to help your business adapt to the changes COVID created, you need to make sure you always have an emergency fund and enough money to cover expenses.
If this is getting too hard for you, consider getting external financing during this period. Business loans are a great way of lightening the load of your cash flow. This will help ensure that you can keep making necessary payments, like rent, paychecks, and to your suppliers.
This tip will allow your business to remain afloat now and in the near future.
3. The importance of having a good cash flow
To survive the pandemic, you need to be both business and finance savvy.
What does this mean?
It means you need to make sure that you take care enough of your finances, so they take care of you when times are hard. Small businesses with a positive cash flow fare better.
Even during normal times, the lack of good cash flow is one of the main reasons why small businesses fail. Now imagine how much COVID-19 can complicate this.
“When businesses restrict cash flow, all of their immediate, plus second and third level, suppliers, their team members, their shareholders, their secondary market will take a hit.” writes Murtaza Manji in an Entrepreneur article.
If you want your business to survive and thrive during the winter wave, you need to have a good cash flow.
But what happens if, because of the nature of your business, you don’t have that much cash on hand?
Nada Sanders mentions: “Cash-strapped businesses, which tend to have lower administrative overhead costs, were at an advantage if they were able to be limber and flexible in their decision-making, or reinvent themselves altogether.”
This means that you can still create a positive outcome for your small business if you prepare yourself well enough and if you’re creative when problem-solving. For example, using technology will give you an advantage over other businesses that simply don’t invest in tech.
Investing in your business during these times can give you the push you need to alter all your processes so you can adapt to the new normal and don’t lose any more clients during the winter wave. A small business loan is a great way to get the capital you need to make such investments.
Endure the winter wave with resources and tools
While another wave of COVID-19 cases seems stressful, remember that you already survived the first wave. You can do it again.
Make sure to know what lies ahead, use everything you have learned so far, and research as much as possible. There are hundreds of resources available out there that can give you all the tools you need to strengthen your business.
Even better yet, receive everything you need directly into your inbox. By subscribing to Camino Financial’s newsletter, you’ll receive tips and tricks that can help your business, as well as the latest information so that you keep up to date with the pandemic and how it affects your business.