How to expand your business during COVID-19
What small businesses and leaders can learn from the mistakes and successes of corporations in past recessions
Economic collapse, business foreclosures and no end in sight…
These may all be some headlines you’ve read in the last 30 days as the COVID-19 global pandemic continues to take hold of the world economy. While a plethora of our favorite local businesses are suffering during this time of economic hardship and uncertainty, there are still reasons to be optimistic.
Optimistic, you say? Well, as you might have heard, this isn’t the first time a global crisis has occurred. Throughout history there have been pandemics that shaped the world in such a way, the effects of them are still being felt.
Beyond social implications
During times like these, there is a sense of wanting to “batten down the hatches” and weather the storm. However, one thing challenging times have in common is while challenging that they produce enormous economic opportunity. Throughout history, many companies have done well after an economic downturn.
In fact, an article in the Harvard Business Review talks about how major corporations fared after their respective crises. The article found that the companies who employed both offensive and defensive strategies tended to do much better at the end of the financially-challenging period. This means a delicate balance is required, and it can be tough to know exactly the right moves to make.
Businesses who were progressive (more offensively minded) did have to lay-off employees, whereas preventative companies laid off more employees, to the tune of 23% vs. 56%, respectively. However, it is not this straight-forward. After the recession in 2000, Target increased its number of capital expenditures by 50% because it invested in new segments and expanded its internet business by partnering with a company with more know-how (Amazon) as a means to sell more products.
It’s not just about putting the gas pedal to the floor. Hewlett Packard (HP), on the other hand, took an aggressive approach. HP relied on a massive restructuring program, acquired Compaq for $25 billion and doubled down R&D increasing expenditures by 9%. These decisions put a great deal of stress on the company and in turn, it struggled to keep up with its competition during the following recovery.
Today, there is a windfall of money being injected into the economy by our federal government. The important thing to do is to strategically analyze, not only how to play defense to keep your doors open, but how to use the money to invest back into your business and help you come out on top. Small businesses can learn from the mistakes of these corporate giants.
Here are a few navigation tips for small businesses during the current crisis:
- Identify the pain points brought on by COVID-19;
- Consider offensive and defensive strategies to address the pain points;
- Find creative solutions to your challenges; and
- Chart a path forward with intentional flexibility.
Small businesses should seek to identify pain points, assess their style of communication and their approach to handling the crisis so far. Whether you are a high-level manager looking to find creative solutions to help your firm or a small business-owner looking to keep your doors open and grow, creative problem solving is of the utmost importance during uncertain times.
During this time, it is important to partner with someone who can help you navigate through this process. There are tools out there to help you assess your needs and find the best way forward. Know you are not alone, and that we will all get through this together.