What’s Next for Small Businesses and Consumers

What’s next? Small businesses are acutely aware that re-opening in the middle of a pandemic poses a unique set of challenges. Even essential businesses that remained open during the nationwide COVID-19 shut-down struggle to balance providing a safe shopping environment with delivering good service. Additionally, there are concerns related to federal aid, long-term profitability, and keeping staff employed. However, one thing is clear—small businesses are resilient and optimistic about making a comeback.

Recently Veem, a global payments network, surveyed 630 small business owners. The company wanted to know how COVID-19 has impacted their businesses.

  • 90 percent are prepared for an economic slowdown after the pandemic
  • 65 percent have applied for federal aid or plan to do so in the future
  • 55 percent have experienced a decline in revenue
  • 52 percent are cutting operational costs
  • 54 percent have a hiring freeze (23 percent are going to downsize staff

Marwan Forzley, Veem’s chief executive officer, said, “Despite all the uncertainty, they’re trying to make changes in their businesses to either benefit from the situation or repurpose their business so that they’re not as badly impacted.”

Response from Consumer’s
Since our country has never faced a similar situation in recent history, it is unclear how consumers will respond after being quarantined for months. No one knows when they will start rebuying non-essential items or how consumers will adjust to the “new normal” required to shop safely in stores. Consumers must lead the way if the economy is going to recover since consumer spending represents two-thirds of the GDP. In Q1, the GDP dropped by 4.8 percent. The projected drop for Q2 can reach 20 percent if consumers don’t start shopping as soon as businesses re-open.

However, due to record job losses, consumers are focused on saving money rather than spending discretionary income. There are also health concerns about being exposed to the virus when consumers go out shopping. An Associated Press/NORC Center for Public Affairs Research poll indicates there are real fears about the virus and lifting restrictions that must be overcome to revitalize the economy.

  • 54 percent are extremely or very concerned
  • 29 percent are somewhat concerned
  • 16 percent are not very concerned or not at all concerned

Not surprisingly, a New York Times poll shows that 40 percent of Americans believe that the country’s financial situation will continue to be bad for the remainder of the year. While 50 percent of those who are unemployed feel this will be the case. There is a shared sentiment among consumers that the recovery may take years, and the wisest thing to do at this point is to prepare for the rough road ahead.

Waiting for a Vaccine
Customers who are afraid that their health is at risk will remain cautious about entering physical stores for the foreseeable future. As reported in the Forrester online survey conducted in mid-May, more than 50 percent of Americans plan to avoid crowded stores for the next one or two years. Forty-two percent are going to spend less time in physical stores than they did before the pandemic. These fears will persist until a safe and effective vaccine becomes widely available to the general population. Even then, the aftermath of the pandemic will continue to have a lasting impact since we are dealing with the unknown.

Steps Small Business Can Take
COVID-19 has fueled the growth of online retailing even among older consumers who were hesitant to purchase products online before the pandemic. The “new normal” for businesses who want to re-open or operate their physical stores successfully depends on making customers feel safe. Offering delivery services is a practical option for small operations that sell products that can easily be dropped off locally. Giving someone the chance to place orders online, or to phone it in, are solutions that can offer peace of mind about being exposed to the virus.

Of course, there will always be people who prefer to come into the store to pick up the items they need. Many operations have installed plastic shields at checkout and placed markers at 6-ft. Intervals to assist shoppers with social distancing. Some businesses have also placed bottles of hand sanitizer throughout the store for the convenience of customers and employees. For many companies wearing masks is not an option. It’s not unusual to see signs posted on doors informing customers that not wearing a mask means they will not receive service. 

Communicate with Customers
Good communication is the basis of a solid relationship with customers. The pandemic has derailed many of the things that we usually take for granted. In the struggle to re-open or make adjustments to your store, it’s easy to forget to communicate with customers. An e-mail or letter can go a long way to reconnect customers to your business and help them feel confident that you share their concerns about being safe during this pandemic.

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