UC Answers: How can businesses navigate post-COVID?
Economics professor provides guidance for small business owners in unprecedented economic climate
“Unprecedented” is a word that has perhaps lost its meaning to overuse. But there’s no word more appropriate for the business climate created by the novel coronavirus pandemic and efforts by officials to prevent its spread.
Measures to minimize the public health crisis have created once-in-a-lifetime business challenges, especially for small business owners. A sharp decrease in revenue didn’t stop the bills from coming in. The federal and state governments have since taken emergency measures to provide relief for struggling businesses, but identifying and navigating the systems to gain access to that aid is a challenge unto itself.
Michael Jones, associate professor of economics with the University of Cincinnati Carl H. Lindner College of Business and executive director of the Kautz Uible Economics Institute, has become an important voice in the conversation on how best to recover from the economic impact of the coronavirus. Journalists in our region and across the country have turned to Jones for his expertise.
First, what challenges did the pandemic cause for small businesses?
JONES: A recent study found that half of all small businesses have less than 30 days of cash on hand. Without government assistance or significant cost restructuring, many small businesses would not have survived the pandemic. In addition, small businesses were disproportionately affected by the stay-at-home orders. As an example, independent clothing retailers could not open their doors to customers while big box retailers could continue to sell clothes in their superstores. While some small businesses could shift their mode of operations, small businesses that provide personal services like barbershops and dentists were particularly impacted. If their customers missed a haircut or a dental cleaning because the business was closed, those customers wouldn’t return and purchase the service twice. That lost revenue isn’t coming back.
Obviously, not all small businesses were able to survive the measures taken to prevent the spread of coronavirus. What do you think made the difference for businesses that were able to weather the storm?
JONES: The small businesses that could quickly pivot their operations and come up with creative ideas were best positioned to weather the storm. My favorite local example of this creativity in action is the Frisch’s Big Boy restaurant just down the street from where I live. During the pandemic, the restaurant sold gallons of milk, bread and even toilet paper from its drive-thru window. Other successful small businesses already had the infrastructure in place to transition workers to continue working from home. They had made investments in information technology and business processes to smoothly transition to remote work. For example, physical trainers who quickly shifted to virtual instruction were able to successfully make it through the pandemic.
What are some considerations small business owners need to take into account as they look to reopen?
JONES: The first and most important step is to ensure that both your employees and your customers feel completely safe in your business. The State Department of Health has posted safety guidelines that all businesses should practice. These may include providing protective supplies, maintaining appropriate distances and enhanced cleaning procedures. Chambers of commerce and industry trade groups have also published guidelines specific to industry sectors like food preparation, retail, and manufacturing.
As you reopen your business, maintain a close relationship with your previous customers. Reach out to them and offer gift certificates or one-time deals. You may even need to change the way you interact with your customers. A small hardware shop might consider home deliveries above a certain purchase threshold. Your customers are as anxious to return to normal as you are, but your business operations may need to change to a “new normal.”
What resources are available to small businesses in terms of state and federal grant monies? What are some challenges that face business owners trying to get access to them?
JONES: Some strategies are easier to implement than others. First, companies can take advantage of the extension of the federal tax return deadline through July 15. At a time when cash is tight, take advantage of any opportunity to extend payments. Small businesses may also be able to negotiate an extension of rent or other debt payments with their lenders. The most well-known federal program is the Paycheck Protection Program (PPP). There is still money available in this second round of funding, although taking the loan may not make sense for every businesses. The U.S. Small Business Administration has other programs, such the Economic Injury Disaster Loan (EIDL), that may have more favorable terms. More locally, Hamilton County, Ohio, has offered grants for up to $10,000 to small businesses in order to reimburse related expenses to COVID-19.
What about resources available to small businesses through the Lindner College of Business? How can Lindner help small businesses during these difficult times?
JONES: More immediately, the Goering Center for Family and Private Business at the Lindner College of Business provides education and training to help business leaders navigate through this crisis. They offer courses in communication, strategic planning and many other areas. While earning a college degree is always a good long-term investment, Lindner also offers standalone courses, executive education, and certificates that can be completed in less than one year. With these shorter options, businesses can quickly retool and gain the edge they need.
Featured image: Lindner Hall, home of the Carl H. Lindner College of Business. Photo/Creative+Brand
Partner with us
The Lindner College of Business is home to centers and institutes that partner with companies to conduct a variety of research and provide learning experiences for students to prepare them to be problem-solvers and business leaders.
This in-house expertise focuses on cutting-edge interdisciplinary research that provides value to constituents and supporters while enabling experiential learning opportunities for students.