The Covid-19 pandemic has, and will continue to, deeply and profoundly impact small businesses. From loss of business to adjusting to remote work, businesses are being forced to adapt – quickly.
In a recent article from Kellogg School of Management at Northwestern University, Professor Sergio Rebelo suggests that without effective treatments or vaccines, containment policies will likely be in effect for 18 months.
Based on that projected duration, Rebelo offered the following advice for companies as we enter a long recession. “… Businesses need to quickly start lowering any fixed costs they possibly can. “The sooner you start the renegotiation of fixed costs, the better off we’re all going to be,’ he says.
And Interise Strong faculty member Leland Goldberg agrees. In his ten-minute presentation on Survival Strategies in a Financial Crisis, Leland says don’t be afraid to call and renegotiate your payment terms. Now is the time to do it. “Don’t be afraid to call them and tell the reality of what’s going on in your business… Landlords are notoriously difficult to negotiate with, but they’re not going to evict you or kick you out, especially now with any issues related to COVID 19. Negotiate with them.”
But it’s not all hard numbers. Building social capital can also be critical during a crisis.
The Kellogg School article illustrates this: “Rebelo uses a story from Madeira, an island off his native Portugal… After an earthquake, the water system there was contaminated. Two supermarkets took very different approaches to selling bottled water. One hiked up prices as demand rose and supply fell. The other kept prices the same and even chartered a boat from Lisbon to bring in more cases of water.
This action was very costly for the second store. But when drinking water was restored on the island, customers flocked to that store, remembering how it had treated them.
The first store “revealed that in a moment of need, they were willing to exploit their customers,” Rebelo says.
Interise Strong is here to help. Access our expert faculty presentations on accessing capital, managing personnel, navigating the CARES ACT resources, and more.