COVID-19 dealt an unprecedented challenge to American small business, and more than half believe recovery will take most of 2020, according to U.S. Census data. While the crisis created major challenges around health and safety, the biggest impact for many businesses is financial.

Recent Wells Fargo research showed that even though most small business owners said things were “going well” prior to the crisis, they’re now struggling. Many called the outlook “bleak,” especially if they didn’t have an online presence. As businesses wait to see what economic recovery might look like, early signs show it won’t be linear: Businesses may be open one day, then closed the next if cases increase. And what “open” means may continue to change.

The closures and changing parameters often translate to lost revenue. However, many small business owners also told Wells Fargo that the crisis presents some type of opportunity. The key to staying afloat financially may be resourcefulness and resilience, thankfully a common trait among small business owners.

Let’s look at how small businesses are coping financially, as well as what you can do to help balance day-to-day financial concerns with future uncertainty and long-term growth.

Prepare for unpredictability

One of the most challenging parts of COVID-19 is the uncertainty. So much is unknown about treating the disease and when a vaccine will emerge that planning ahead can feel daunting.

Although you need to stay informed, the constant drumbeat of bad news and speculation can be overwhelming. Try to pinpoint what’s most important to your business by checking news and social media just once a day and subscribing to newsletters from trade associations in your industry, where they’re likely to share only the most relevant pieces of information.

Keep in mind that unpredictability doesn’t need to lead to an overhaul of how you do business. Most small businesses are continuing to manage their finances as they did before COVID-19, Wells Fargo research found.

But in addition to basics, like cash flow analysis, try taking your financial planning a step further by creating sales forecasts for your business based on different potential outcomes. If you’re keeping up to date on news and industry trends, it’s likely you have a few “what if” scenarios in mind, so try putting numbers to them and doing some analysis for how those various scenarios will affect your finances.

Some businesses may find that pent-up demand fuels business. Alternatively, if the outlook is not as sunny, you will have a firm grasp of what expenses need to be cut and actions need to be taken for your business to keep operating.

COVID-19’s financial impact is complicated

As of Q2, 2020


of small businesses said they were negatively affected.1


of small businesses said their financial situation is somewhat or very good.2


of small businesses expect their finances to be somewhat or very good by summer 2021.3

1. US Census Small Business Survey; June 21-27, 2020.
2,3. Wells Fargo Small Business Survey; Q2, 2020.

Find opportunities in crisis

As the pandemic economy continues to evolve, be on the lookout for potential opportunities. Chances are you have already made some modifications to how your business operates (some eight in 10 small businesses have).

Ideally, the changes you make now are things that turn into long-term additions to your business that can boost your revenue stream well beyond the COVID-19 crisis. Consider Molly Moon’s Homemade Ice Cream in Seattle, Washington. Owner Molly Moon Neitzel told NPR she had to shut down completely and lay off all her employees. But by selling sweatshirts online, as well as cards that could be redeemed for ice cream in the future, she made nearly $80,000 — enough to fund health insurance for laid-off employees.

Moon Neitzel also did what many small business owners are grappling with: She pivoted. She increased the number of sales she made to supermarkets, versus at her scoop shops, and is trying to find a balance that will keep the business going through 2021.

Expand your online footprint

While many businesses are looking at online sales as an opportunity, marketing isn’t the only area where going digital can help small businesses.

COVID-19 also motivated many businesses to do more banking online, whether it’s accepting new forms of contactless payment or increasing their online transactions with banks.

Going online can make banking easier during social distancing. It can take time to get comfortable with digital banking if you’re used to face-to-face interactions. But the switch may help you in the long run. Trends show the U.S. is moving away from cash and toward automation. COVID-19 could be a catalyst that pushes consumers even further toward cashless payments.

Take a look at how your customers usually pay and how you bank, and see if there’s a way to streamline how you accept payment, make deposits, and manage transactions, since this could help you not just during the pandemic but well into the future. The speed of these transactions and their ability to link with various accounting software can also make it easier for you to stay on top of cash flow and manage your finances in real time.

Plus, banking online can help protect your business if your area experiences new shutdowns that prevent your bank from keeping branches open. If you have questions about setting up online banking, talk to your banker.

Take advantage of the help available

Many small businesses applied for and received Paycheck Protection Program (PPP) funds from the government. And it’s possible you applied for additional funding as well, via the government, nonprofit, or private sources.

Managing those funds strategically can help you take full advantage of the benefit as you navigate uncertainty. Staying organized is the first step. Make sure you document where the funds are going and keep track of your finances during the period you received them. This can help later when you apply for loan forgiveness or navigate repayment.

It’s also important to remember that PPP isn’t the only program created to help small business owners through the crisis.

If you’re still worried about your bottom line, consider alternative funding sources, such as the Opportunity Finance Network or grants from large corporations aimed at boosting small business. Some city and state governments have created local financing programs.

Grant funds may be available for women-, veteran-, and minority-owned business owners. Check with your local Small Business Development Center for more information.

Crowdfunding may also be an option. In Chicago, Namaskar Yoga Studio ran out of money because of COVID-19–related shutdowns and created a GoFundMe to raise capital to reopen. The studio had created such loyalty among the community — bolstered by the decision to pay teachers through the crisis despite a closure — that a student shared the fundraiser on Nextdoor. Less than a month after posting, the studio had very nearly reached its goal.

With communities rallying around small business, you might be able to find or organize a similar fundraiser. Local economic development groups may be able to help with joint fundraising efforts.

This tactic can also help with managing costs and supply chain issues. In one New York town, small businesses came together to place larger orders for personal protective equipment (PPE) and office supplies, which drove costs down for all of the participants.

In the meantime, continue to conserve cash and use any new cash infusions wisely. One area that may make sense to invest: updates to safety and operations. Being able to assure your employees and customers that you’re operating safely can help boost morale and sales.

Look toward the future

As you begin to make investments and continue to progress through the stages of reopening, it’s critical to measure and track effectiveness. Continue investing in those activities that are paying off and drop those that are not generating results. This approach will help you see your customers’ and community’s needs more clearly and plan for the future while monitoring your cash flow. Evaluating the changes you’ve made to your business in real time is a good first step when it comes to creating solid financial footing for 2021 and beyond.

Sources: Federal Reserve, National Federation of Independent Business, Nextdoor, GoFundMe, AARP