Businesses tactics in a COVID19 world, Part 2: Generating revenue
Below is the second part of a 3-part series on what mainstreet businesses can do right now to shift their business in the changing COVID-19 environment. Read Part 1 here.
If you’re stuck, reach out. CO+HOOTS is hosting weekly financial/legal information sessions to support personalized guidance during this time. We are here for you. Learn more here: bit.ly/eventsatco
The trick to effectively pivoting your business to generate new income still comes down to the basics — knowing your customer market and what they need. Restaurants and service-based businesses that used technology to build their online business or successfully streamlined operations before the mandated shutdown have bought themselves a few additional months of survival.
In times of crisis, needs shift regularly so never stop listening and gathering information. Most people are wary of spending right now, so how can you utilize your time to build trust until customers are ready? Or is there something else that customers need right now versus what you’re selling? Or do they need what you’re selling, but need to buy and receive it differently than how it’s being done now?
So what does that all look like? Here are some ideas, which may lead you to realize how you could be running much leaner with more margins.
- Start a prepay program if you know you can deliver services/products later. Some restaurants are marketing discounted catering packages that can be used at a later date.
- Be honest with the help you need. Five years ago, a local paper shutdown without notice and hundreds of people said they would have chipped in to support the paper if it had just let people know HOW they needed help. Your customers can help you figure out new models. Be open to feedback.
- Consider new ways to sell. Do you have products or services that could be easily sold differently? For example, law firms are shifting from hourly rates to packaged rates to help businesses negotiate their leases.
- Instead of losing a customer altogether because of the crisis, consider a temporary discounted rate. Gusto, a payroll company, has offered to defer fees by three months, knowing that many companies may have to layoff their employees. With the discount, Gusto hopes to retain those companies as customers. but if they can retain customers, it’s better than losing them.
After two weeks of operating a delivery-only business for their restaurant in Minneapolis, my parents have seen a large uptick in sales. Their revenue is not as high as it was before, but this new process has made operations easier for a couple in their 70s. They are now seriously considering permanently shifting their business model to takeout only.
Don’t Count on Customers Only
Fortunately, business-to-business companies are jumping in to help those who are still looking to improve their sales and operations. Almost all the food delivery networks (Uber Eats, Grubhub, DoorDash) are waiving their fees to help their restaurant partners generate more revenue during the COVID-19 outbreak.
You can check other discounts and business tool freebies here:
Local communities are also launching campaigns to further support local businesses. The Arizona Restaurant Association has launched Take Out Week (https://arizonarestaurantweek.com/). The Arizona Asian Chamber of Commerce has also started a campaign to support Asian run businesses called #takeoutthursday. Restaurants can promote these types of local events to bring in more orders. You may want to check your local business associations/coalitions to see what groups are coming together to support mainstreet businesses.
The federal government’s massive CARE stimulus bill is a huge parachute to many small businesses impacted by COVID. Beyond the $1,200 stimulus check that will be coming to anyone who makes under $75k/year, there are two loan products for small businesses.
The Payroll Protection Program (PPP) loan is forgivable if companies maintain payroll, comes with a fixed 1% interest rate and has a loan cap of 2.5x your monthly payroll costs with a 2-year term. The second loan option is the Economic Injury Disaster Loan (EIDJ) loan, which has a 3.75% interest rate and allows for a loan amount of up to $2 million over a 30-year term. But this loan is not forgivable
A lot of organizations have launched grant programs to help small businesses during COVID. Local First Arizona has started a micro-grant program (https://www.localfirstaz.com/small-business-relief-fund) and the state has a list of resources that small businesses can apply for. (https://www.azcommerce.com/…/business-financial-support/). Again check your own local community to find additional support.
UP NEXT Part 3: Rebuilding