Tips to help you overcome the challenges facing small business owners as we recover from COVID-19.
As the U.S. moves to fully reopen, many small business owners are seeing a surge in demand. But lingering side effects from the COVID-19 crisis are making it hard for some owners to keep pace with sales. This combination can create a challenging path to recovery.
This article walks through some of the most common hurdles to growth after the first year of COVID: staffing, supply chain, material costs, customer service, and cash flow. Which of these apply to you may depend on your business, so consider skipping to section(s) that are most relevant to you.
1. Staffing the recovery
Business owners across the country report struggling to find employees to meet renewed demand. So, if you’re struggling to find workers and keep up with sales, you’re not alone.
Some economists say the job market is suffering from mismatched supply and demand following the pandemic and suggest it will self-adjust in time. But many business owners may not be able to wait until more applicants appear.
If you need staffing now, start by pinpointing the main hurdle you’re facing.
- Are you struggling to find candidates? If you’re having a hard time finding candidates, experiment with how you’re searching for employees. Could you post the listing somewhere other than where you’re currently advertising? In addition to more traditional job boards, you might try Facebook, community groups, and trade organizations.
- Are you finding candidates, but having a hard time getting them to accept an offer? If your challenge is getting candidates to accept your offer, there are a few ideas to consider. First, see if you can follow up with candidates about why they didn’t feel it was a match. It could be that expectations in your industry (regarding work conditions, salary, or similar) changed during the pandemic.
- Does the role you’re filling still makes sense? Can you hire two part-time or freelance workers versus one full-time employee? You may need to rethink how you staff your businesses and define roles differently.
With all of these questions, you may find it helpful to connect with your network. Ask other business owners in your industry about staffing. Trade organizations and publications can also be a good resource. There may be trends in hiring you’re unaware of that could help you adjust your job description to be more enticing. Ideally, you’ll be able to identify whether an adjustment in wages, hours, working conditions, or something else entirely might help you attract the candidates you want.
Action tip: As you wait to find help, you or your current employees may take on more work and responsibility. Get ahead of potential burnout, which could exacerbate any staffing problems, by creating a strategy for work-life balance as you look to fill open positions.
2. Managing supply-chain disruptions
The Wall Street Journal recently declared the global supply chain “a mess,” so if you’re having a hard time stocking your small business, you’re not alone. Weather issues and labor shortages at U.S. ports caused a backlog of imports in 2021. Add that to COVID-related factors, like the varied pace of the global recovery, and it’s a perfect storm for supply-chain disruptions.
The good news is that you can create a plan for your business that accounts for potential disruption. Consulting firm Accenture created a model for how to respond to supply-chain disruptions, and while their model is aimed at larger companies, the principles can be adapted by small business owners: sense, analyze, and configure.
- Sense: Stay on top of potential risks by reading industry news or keeping an eye on local headlines where your suppliers are located.
- Analyze: When you spot a potential risk, develop “what-if” scenarios. Will you pass price increases on to customers? Give customers a choice on speed or price?
- Configure: Once you’ve analyzed the situation, update your business model as changes occur. Spend extra time thinking about how changes could affect your margins to make sure your adaptations are sustainable.
Action tip: Put it in writing. Many owners have a general sense of their supply chain and the risks, but documenting things can help. Keeping a log makes it easier to spot trends and come up with ideas for how to adapt.
3. Rising cost of materials
Supply-chain disruptions aren’t the only challenge when it comes to expenses. Some material costs are increasing for reasons that aren’t tied to supply. For instance, prices for copper and lumber are up, as are global food prices, plus energy and transportation costs.
These costs tend to be associated with economic expansion (as well as inflation), so it’s not uncommon to see them rise during a recovery. But it can be hard to maintain your margins as costs increase unless you pass those costs on to customers.
Like with a supply-chain disruption, you may need to think through your margins and how much flexibility you have when it comes to pricing. You might also consider alternate materials and talk to your customers about adjusting your products or services to account for changing costs. (For instance, a restaurant owner might adjust their menu to feature different produce, and a carpenter might switch from mahogany to maple temporarily.)
Action tip: If you do need to adjust prices or your product, share the reason with customers, including how much your costs have increased. Transparency can help you retain customers and build deeper relationships.
4. Challenging customer relationships
The COVID-19 crisis disrupted customer relationships for a number of businesses. And after more than a year of social distancing, some customers may have different expectations from business owners than they did pre-pandemic. It’s possible you could encounter more strained customer interactions as people adjust to “business as usual.”
As a small business owner, relationships can be central to your recovery. Any potential issues, like increased prices or longer wait times due to staffing issues, could be amplified if it begins to strain your customer relationships.
To help get ahead of potential disruptions, create a strategy to focus on your customers. Specifically, think through how you’ll communicate with them. This could be about day-to-day things, like menus, services, or billing. But you could also plan out how you’ll address any challenges you’re facing. Being transparent with your customers can help build loyalty.
This may prove to be a critical time for rebuilding and strengthening customer relationships, so putting extra effort into customer service now may pay off in the long run.
Action tip: Consider customer appreciation initiatives. This could be as simple as finding ways to tell customers you value them, like special thank you cards, or developing a loyalty program to encourage engagement.
5. Cash flow and capital
If you’ve been running on very tight cash flow, you may not have a lot of financial wiggle room to address any of the challenges we’ve discussed (and any we haven’t). Many of the COVID-specific resources, such as Paycheck Protection Program funding, are expired, but there are still organizations looking to help small businesses.
Research funding opportunities and grants. Consider looking for programs and offers that are unique, as you may have better odds. Grants that focus on your specific industry likely have a smaller applicant pool than grants for small business owners in general. There may also be programs looking to support female business owners, minorities, veterans, LGBTQ business owners, and so on.
You can also talk to your bank about more traditional financing options, like lines of credit or a business credit card.
Action tip: If you apply for credit with a bank, be sure to discuss your specific needs with your banker. They can help you figure out which solution makes the most sense for you, based on your circumstances, current rates, and more.
Learn more about Wells Fargo’s solutions for small business owners.
Sources: Voice of America, Wall Street Journal, Accenture, Wall Street Journal, CNN