A few months ago, many small businesses believed the worst of the pandemic was behind them. Then the Omicron variant emerged to roll back much of the progress made. For more than two years, business owners managed to adjust to unprecedented situations beyond their control. This adjustment can be especially difficult for independent retailers who choose entrepreneurship as the best option to shape their destiny.
Pre-pandemic, there was a sense of order—steps needed to be followed to achieve the desired business results. Now, success depends on being creative and leveraging the opportunities presented in these trying times. Here are three suggestions that can help your small or mid-size business deal with problems caused by the pandemic.
Buy Local and American Products to Keep Shelves Stocked
When factories shut down in China and other countries the U.S. depended on for essential goods, semiconductor chips, and manufacturing parts, it was seen as temporary. However, what appeared on the surface to be a manageable situation has created ongoing supply chain disruptions in this country and across the globe. Production delays and delivery issues are the norms since manufacturing operations can no longer depend on having the materials or healthy workforce required to support an efficiently-operated supply chain.
Once imports finally arrive at ports on the west coast, ships then sit and wait for dock workers to unload the backlog of goods. That’s not happening fast enough since there is also a shortage of laborers, trucks, and drivers. “The infrastructure is at its breaking point, in terms of being able to deal with demand and distribution of supply,” said Ayman Omar, associate professor of supply chain management at American University’s Kogod School of Business. “The massive amount of demand that has shot up over the last five to 10 years, capacity has not kept up.”
So, what can your business do to avoid empty store shelves and upset customers? Follow the advice being given to consumers these days–shop local. Connect with American manufacturers who can supply the products you typically import from overseas. These goods may cost you and your customers slightly more than you currently pay. However, studies indicate consumers are willing to pay higher prices for America made products. You also may need to raise prices to retain current profit margins. Customers may not like it, but the rising inflation rate has made them accustomed to paying more for groceries and just about everything else. Be sure to communicate with your customers. Most people will be supportive and understand.
Be Pro-active and Manage Cash-flow
We should hope for the best and prepare for the worst in life. If your business is experiencing finance-related problems tied to supply chain disruptions, it’s best to identify options that can help you manage cash flow.
- Contact your financial partners to ensure your previous lines of credit are still available or to investigate new opportunities that you can tap into in the future.
- Focus on the cash-to-cash conversion cycle by shifting focus from income statements to balance sheets. Rather than primarily concentrating on inventory, equally coordinate payables, receivables, and inventory to free-up working capital.
- Manage cash outflows by reducing variable costs adjusted to operate the business more efficiently. Consider all options to reduce spending to avoid layoffs of permanent employees.
Check into Loans Offered by the Small Business Administration
It’s always a good idea to be aware of loans offered by the Small Business Administration (SBA). Three loan programs are currently available. These include the 7 (a) loan, 504 loans, and microloan. The required qualifications and business purposes are different for each loan. Specific details about each type of loan can be found at SBA. Gov.
The 7(a) Loan Program
This is the SBA’s most common loan program. It is the best option when real estate is part of a business purchase. However, it can also be used for short- and long-term working capital, refinancing current business debt, and purchasing furniture, fixtures, and supplies.
The 504 Loan Program
This program provides long-term, fixed-rate financing of up to $5 million for significant fixed assets that facilitate business growth and job creation. 504 loans can be accessed through Certified Development Companies (CDCs). A 504 loan can assist with purchasing or constructing existing buildings or land, new facilities, long-term machinery, and equipment, or improving existing facilities, land, streets, utilities, parking lots, and landscaping.
The microloan program
Loans up to $50,000 are available to help small businesses and specific not-for-profit childcare centers start-up and expand. The average microloan is about $13,000. Specially designated Intermediary lenders administer the Microloan program for eligible borrowers. Loans can be used for working capital, inventory, supplies, fixtures, furniture, equipment, and machinery.
Businesses are dealing with complex problems, and there are no easy answers. However, business owners must take action before the situations reach a tipping point. Support and resources are available to help retailers during this pandemic. It’s up to you to access programs to benefit your company.