Andi Gray, president of Strategy Leaders, describes the plight of small businesses in the pandemic and economic downturn, and emphasizes their importance in a 21st Century economy.
Small businesses are faring poorly this year. Gray quotes estimates that the U.S. could lose 50% of all small businesses in the course of the coronavirus pandemic. The last recession took seven years for businesses to recover, but those were largely in the banking, automotive and insurance sectors. The current crisis is impacting every part of the economy.
Manufacturers are struggling to obtain parts from suppliers, and make products that customers still want. Those with the greatest chance of survival are the ones willing to pivot, possibly toward making something entirely different than they’re used to. “Hope is not a plan,” Gray says, urging companies to get creative about changing their business model in line with current needs. She cites one manufacturer that shifted from environmental designs to the production of personal protective equipment. In the process, it was able to hire many of its vendors’ workers who had been laid off. “They’re continuing in an entirely new line that didn’t exist as a business for them 120 days ago,” she says.
Government support has been inadequate to keep both businesses and workers afloat. What money was disbursed was spent quickly, and a new round of aid has been painfully slow in coming — assuming it arrives at all. But Gray says companies can’t wait for a handout. They need to innovate now. “I don’t think anything less will feed the survival of most businesses,” she says, noting that the U.S. has essentially become an e-commerce economy in just 90 days — a transformation that most thought would take 20 years to complete. Small businesses must adapt.
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