COVID-19 has made 2020 a year of adaptation, pivots and changes for small businesses across the country. While some were forced to close and many struggled to stay afloat, small businesses have dug deep for creative ways to rise to the occasion, from virtual services to new products and processes.
According to a recent survey by TD Bank, roughly half of U.S. small business owners (SBOs) didn't have to close at all during the pandemic, thanks in large part to their ability to adapt. Over a quarter of respondents expect to maintain their current revenue through the end of the year, and 16% even anticipate an increase in revenue in 2020.
So, what are these small businesses doing right? While the Paycheck Protection Program was a big financial factor (43% of SBOs surveyed received a PPP loan), the businesses that have thrived this year have worked to make customers feel comfortable and safe doing business with them during this time of uncertainty, said Jeff Fazio, head of small business specialists at TD Bank.
"What we've heard from [TD] customers who are doing well is that they acted quickly and decisively to adjust their business to grow," Fazio explained.
Pandemic pivots that saved small businesses
Of the 750 SBOs TD surveyed, the majority (59%) have annual revenues of $500,000 or less, which means they didn't have a lot of resources to make huge operational changes. However, there were a few important pivots these businesses made to ensure their survival during COVID-19.
First and foremost, the ability to continue operating digitally was a critical factor in how businesses have fared throughout the pandemic. Among the 69% of SBOs that modified their operations for customers during COVID-19, common changes included adding virtual functions like appointments/telehealth or conferences (25%), creating a new delivery or curbside pickup service (15%) and developing e-commerce/online sales (11%).
For some businesses, part of the pivot to online operations also involved accepting cashless and contactless payment options for the first time. Fazio noted that some businesses were reluctant to do this at the start of the pandemic. However, as more and more of daily life shifted to the virtual realm, cash-only businesses realized that accepting credit cards and other digital payments was the only way to survive.
"Consumers are more likely to feel safer shopping or dining [at places] where they can use contactless payments," Fazio told CO—.
Other important changes SBOs made this year include:
- Adding work-from-home capabilities to reduce the risk of spreading COVID-19 in the workplace (28%).
- Reducing operating hours (27%) and staff (20%), either temporarily or permanently, to cut costs during periods of closure or lower revenue.
- Investing in additional cleaning services to better meet the health and safety expectations of employees and consumers (18%).
[Finding] new ways of doing business that are safer and more efficient will be critical.
Jeff Fazio, head of small business specialists, TD Bank
How small businesses can ride out the rest of COVID-19
With COVID-19 cases rising across the country again, experts believe America is entering the "second wave" of the pandemic and cases will continue to surge through the winter months. While it's uncertain how states will respond at this point, businesses must be prepared to make additional changes in 2021 to survive and set themselves up for longer-term recovery.
According to Fazio, business owners must focus on operating as efficiently as possible in the year ahead. Every business needs to look carefully at its expenses and cut costs where appropriate, he said.
"This includes negotiating with vendors you're working with, not only trying to find a more competitive price but looking for other options they have," Fazio added. "[Finding] new ways of doing business that are safer and more efficient will be critical."
One small business that made some smart pivots and negotiations during the pandemic is TD Bank customer Lambda Vodka. This LGBTQ+ couple-owned business had planned to open a new Harlem lounge in April, but the owners’ grand opening plans were, of course, disrupted by New York's stay-at-home order.
To cope, founders Charles Hughes and Richard Solomon applied for and received an Economic Injury Disaster Loan (EIDL) through the U.S. Small Business Administration and started a GoFundMe fundraiser. They also worked out an arrangement with their landlord on their rent and got deferments on their small business credit card and home equity line of credit payments through TD.
The Lambda founders' quick thinking and swift action serves as a good lesson for small businesses as they think about their financial future and how they'll keep themselves afloat if a second round of closures and stay-at-home orders goes into effect.
Nearly 70% of TD's survey respondents acknowledged they need to prioritize building stable financing reserves, enhancing their business model flexibility and improving their budgeting and accounting methods to cover future expenses. Fazio reminded business owners that they're not alone during these difficult times and encouraged them to take advantage of all available resources to prepare for the future.
"Utilize your trusted partners, whether it's your banker, attorney, CPA or even fellow colleagues," Fazio said. "You're not alone in this. There are so many resources available to help small businesses. Owners need to utilize all of them in [these] changing economic times."
Visit TD's Small Business Banking page to learn more about the services, financial products and resources available to small businesses that are struggling during COVID-19.
