In a previous article from the UHV Small Business Development Center (SBDC), Advisor Mark Martinez enumerated five qualities successful businesses possess that helped them make it through the pandemic. Mark’s general point was those businesses are flexible and have a contingency plan. I would like to highlight some specifics of how some of our clients here at the SBDC did just that with success and how businesses of all types can plan for future disruptions.
For businesses to learn from the pandemic and be prepared for the next major disruption, these points need to be considered.
First, access to cash has been critical over the past 18 months. Although some funding may be available through the Economic Injury Disaster Loan Program, a business can’t depend on that. To prepare now, contact your bank to secure a line of credit. The process of getting a line of credit established is the same as applying for a loan. This product usually comes with a minimal annual fee and has no other cost unless and until you use the line of credit.
Second, evaluate any fixed contracts that you may have. Don’t let a sudden downturn catch your business with equipment or inventory that you are obligated to make payments on. Your business needs to have the ability to return equipment that is suddenly unused and avoid the damage to your cash position.
Third, consider the broad range of abilities that your employees may have. For example, during the pandemic, companies with welders who were idle due to the construction industry downturn began to build cattle guards, BBQ pits and fencing. Idle truck drivers began to haul fruit and vegetables from South Texas while their construction need was stalled.
Fourth, many businesses that survived, thrived by beefing up their online presence. Businesses discovered that touching their clients/customers via email campaigns, website enhancements and social media postings is much less expensive than traditional methods and many times more effective. Also, remember that new customers will check you out online first before you ever hear from them.
Fifth, evaluate cost/profit centers. In hard times, a critical look should be taken at those products or services that are not as profitable as others. Many businesses successfully eliminated low profit items and used those saved funds to support more profitable lines.
And maybe most important, we always recommend that in hard times, you go back and evaluate your “value proposition.” What is the reason your customers do business with you rather than with your competitors? Competitive businesses lean into, and reinforce, their value proposition for success.
Ty Zeller is an advisor with the UHV Small Business Development Center. The UHV SBDC is part of a nationwide small business assistance program serving the small business community. The center offers counseling, training and technical assistance to existing and start-up businesses in an 11-county area. For more information regarding one-on-one counseling or training programs, please contact the University of Houston-Victoria, Small Business Development Center at 361-485-4485 or [email protected].