Session 5: Small businesses must work to adapt to a future with a new normal and more.
Popular Bank Chief Operating Officer Manuel Chinea and Latin Biz Today advisory board member Elias Mendoza continue to discuss the growing needs of small and micro businesses across the United States in the fourth installment of Driving Business Success Through the Pandemic. Leveraging their unique industry experience, Driving Success Through the Pandemic is a nine-part virtual discussion series that aims to empower small business owners to successfully navigate immediate and ongoing challenges and opportunities.
Since the beginning of the COVID-19 health crisis, more than 160,000 small businesses have closed for good and many more are at risk of failure as they face operational challenges and changing restrictions1. Notably, losses for businesses owned by women, racial minorities, and immigrants have been disproportionately severe2. While an increasingly aggressive vaccine rollout continues to encourage optimism, small businesses continue to feel the strain as they continue to navigate their new normal. In this episode of Driving Success Through the Pandemic, Chinea and Mendoza tackle the importance of business agility and adaptability amid ongoing disruption.
See key discussion takeaways below.
- Small businesses must work to adapt to a future with a new normal.
As the COVID-19 health crisis remains a serious threat, recent events around vaccine rollout signal that meaningful recovery is on the way. Consumers are craving normalcy – they want to travel, eat at restaurants, visit shops and go to theaters. With this in mind, small businesses need to think beyond their current challenges and plan for how they will adapt to an influx of demand for good and services in a short period of time.
Small businesses continuing to face severe disruption will do well to stay afloat in the final months to not only adjust to their current circumstances and plan for economic recovery.
- Strategic short-term solutions will likely drive long-term business success.
Throughout the pandemic, small businesses have worked to scale local health and safety requirements, as well as and changing customer needs. This includes ecommerce capabilities, diversifying payment methods, digital upgrades and pick/delivery services. While the immediate need for of these changes may eventually wear off, small business owners should look at these adjustments as steppingstones for long-term growth.
“I think there will be a lasting behavioral change [among customers]. Folks are hungry to get back to restaurants and they’re hungry to have more social interaction and dealing with people more on a human basis, as opposed to a Zoom basis. However, some of the [business strategies] that have been rolled out during the pandemic are going to stick around for a while. There are conveniences that people have gotten used to and they are going to take advantage. Businesses that are starting to address the short-term customer requirements are setting themselves up pretty nicely for the future. Of course, it takes a lot of agility to do that.”
Mendoza and Chinea agreed that small business owners should take time to listen to understand their customers’ new needs and preference, consider retraining staff and revisiting business and revenue models to ensure that they will be able to successfully scale changing consumer behaviors around digital and service capabilities.
- An increasingly aggressive vaccine rollout means small businesses can take advantage of diversifying financing opportunities.
Now is a critical time for financing. While government programs including PPP remain at the forefront of the effort to support small businesses amid the pandemic, private lenders and nongovernment entities are working to play a more significant role amid increased optimism.
“The most recent announcements around the vaccines give banks a lot more confidence about betting on the future,” said Chinea. “It’s a lot more difficult for Financial Institutions to continue to extend credit when there’s no end in sight to the whole situation around the quarantine. By default, banks have had to tighten their underwriting requirements and become more and more restrictive in terms of lending.”
Small businesses should lean into this confidence and work closely with their bank or financial institution to both extend their runway amid disruption, but also secure the resources help them make the meaningful changes that that secure short-term survival and long-term growth in a more stable environment.
1 Sundaram, Anjali. “SMALL BUSINESS Yelp Data Shows 60% of Business Closures Due to the Coronavirus Pandemic Are Now Permanent.” CNBC, 16 Sept. 2020, www.cnbc.com/2020/09/16/yelp-data-shows-60percent-of-business-closures-due-to-the-coronavirus-pandemic-are-now-permanent.html.
2 Fairlie, Robert. “COVID-19, Small Business Owners, and Racial Inequality.” National Bureau of Economic Research, 2020, www.nber.org/reporter/2020number4/covid-19-small-business-owners-and-racial-inequality.