States that started opening several weeks ago are starting to hit record highs of new COVID-19 cases, and even states that have proceeded cautiously throughout the pandemic are starting to backtrack on their reopening plans. Small businesses that have somehow managed to weather the first few months of 2020 or were planning to re-open as the coronavirus subsided could face a new set of challenges if the country locks down again. Here are some ways another shutdown could affect the US small business industry.
One of the biggest challenges for U.S. small businesses during a second government shutdown would be uncertainty. People had a mindset of sacrificing for a period via shutdowns and social distancing in an effort to “flatten the curve.” Then, things would return to normal. If nationwide shutdowns are required again, all bets are off. Any resources or contingencies that businesses had in place to weather the storm the first time around will almost certainly be exhausted by now. Small businesses would be on the lookout for additional government relief to help them navigate the next round of shutdowns.
The psychological impact of a shutdown on the American public is another unknown for businesses. Most Americans were starting to feel like they were out of the woods; millions of them have even returned to work in the past few weeks. Things were starting to feel a little bit like they were moving toward normal. A second shutdown could shatter the public’s confidence that “normal” is coming back anytime soon. This could dramatically alter consumer behavior and spending patterns, and it’s worth watching carefully.
More Government Relief Likely
Even without another government shutdown, additional government relief was likely. Now, with new cases rising rapidly and states halting or reversing their reopening, new coronavirus relief seems almost certain. Congress is currently considering several measures to support individuals and small businesses. For example, Congress is considering a new round of stimulus payments and incentive funding to individuals to help them weather the current economic situation.
Additionally, lawmakers are working to craft legislation to enable U.S. small businesses to weather a prolonged period of diminished consumer demand. Several state governments are also considering critical business relief measures. Regardless of which additional measures go into effect, federal and state programs will be a critical enabler for U.S. small businesses hit hard by another potential coronavirus lockdown.
Innovation Will Be Critical
No matter how much cash is on hand or how much government relief is provided, it almost certainly won’t be enough to keep companies moving forward indefinitely. Instead, U.S. small businesses are going to have to adapt to survive. Fortunately, many businesses already have experience innovating to the “new normal” during the last lockdown.
There are numerous examples of businesses adapting to survive the recent coronavirus lockdown. Traditional eat-in restaurants started offering curbside and delivery services. Bars and microbreweries started bottling and canning their own beers and ciders, and either delivered them or made them available for pickup. Most people were required to adapt to remote working and became adept (if somewhat annoyed) at using Zoom and other teleconferencing software to conduct meetings and get work completed.
Even small farms, with demand from restaurants and other customers severely diminished, dramatically altered their business models by beginning community-supported agriculture and other programs to keep revenue coming in. Innovations such as these are going to be critical for small businesses to survive a second potential lockdown.
Going Local Is Important
One advantage that many U.S. small businesses have over their larger counterparts is that they often serve the communities in which they’re based, meaning their customers are their neighbors. Going local may be more important than ever in the event of a second lockdown. If new cases continue to expand across states, consumers are likely to deal more frequently with businesses in their community that they know and trust. This could boost sales a bit, or at least generate enough revenue to help businesses weather the storm.
Additionally, during the first wave of the coronavirus pandemic, many of the supply chains that we’ve come to rely upon in modern society came under intense pressure due to COVID-19. Many meat-processing facilities – a key part of the food supply chain – were operating at diminished capacity due to high rates of infection. There were also concerns about whether the trucking and transportation industry would be able to keep up with deliveries due to their infection risks. Supply chains may come under even more intense pressure during a second lockdown, so small businesses’ capacity to meet the needs of local customers may offer them a competitive advantage.
Preparing for Lockdown #2
No one wants to go through a second lockdown, but it may be necessary to stem the tide against coronavirus. So, take the key points of this article into consideration, and start preparing your small business for the possibility of another lockdown.