When the pandemic first hit, there was endless talk about a V-shaped recovery where we would bottom out and recover at relatively the same pace. Some experts, however, are beginning to think recovery may look more like a checkmark instead, with a compressed downward cycle followed by a sharp increase in economic growth and prosperity.
In January’s Startup blog, I used the term “Soaring 20s” to characterize our state’s recovery as we begin to leave the pandemic behind and start rebuilding. There are already encouraging signs. Retail sales have increased, previously closed businesses are reopening as health orders are relaxed, new unemployment claims have either leveled off or are slowing, and interest rates are at record lows.
According to economists at the Federal Reserve of Philadelphia, the “V” could become more of a checkmark. They predict U.S. output might increase 4.5% this year which would be the best year since 1999. Some say it could even grow to 6.8% in the next year and that unemployment could drop to 4.1% by December. By comparison, this level of prosperity took eight years to achieve after the Great Recession.
Other factors at play cause economists to be optimistic about this type of recovery and even a bit of a boom in the wake of the pandemic. Though the vaccine rollout was slower than anticipated, it is rapidly picking up steam as production catches up with demand. Thanks to federal dollars, there appears to be less structural damage to the economy than first thought. So far, business failures, home foreclosures and personal bankruptcies have remained lower than anticipated. Finally, consumers are sitting on roughly a trillion dollars in cash because they’ve mostly been on lockdown for a year.
This perfect storm could unleash a rapid and substantial recovery if other stars align, such as solving the childcare issue and returning students to school.
So, what does this mean for small businesses?
The recovery’s uncertain trajectory means businesses will need to have a Plan A, B, and maybe even a C. For businesses with offices, work anywhere models and digital tools have proven that productivity can actually increase with a remote workforce. The model not only improves morale but significantly reduces overhead. Businesses looking for new opportunities can explore ways to support the work anywhere movement with new programs, products and services to improve collaboration and communication further.
For brick and mortar operations such as main street shops, restaurants, cafes and bars, the return to “normal” could mean a flood of new customers who have been dying to eat out, enjoy their favorite microbrew and roam store aisles again. This means creating a scalable model that could respond to rapid growth, ensuring that supply chain and workforce needs match anticipated traffic and sales. This needs to be tempered by the fact that consumer preferences may have changed permanently during the pandemic, meaning that the world may not be ready to beat a path to your particular door yet. Hence the need to have Plan B and C as backups.
One of the greatest concerns in a rapid recovery is that certain segments of the population will be left behind. Many businesses and workers in underserved and underrepresented populations were just beginning to make some headway after the Great Recession.
To make ends meet, they have had to use what little savings they had set aside to meet the basics. They may have had to close their business permanently. Workers with basic skills may have had to be laid off, and the jobs they held are increasingly being automated or simply done away with.
This is an excellent time for a community to come together to support one another. As you look at your plans to return to business, see if there are businesses and people in your own community that can help you recreate or enhance your supply chain, provide sales leads, refer great workers to you and spread the word that you’re open again.
It’s also the perfect time to help a new business start in your community. Filling the empty spaces on main street or strip malls will bring more business to everyone. While you may not have any capital to offer, you can help others with your expertise or skills. Handy with a saw? How about helping the store next door get ready for customers. A whiz at marketing or finances? Trade out your expertise for something another business owner is willing to offer in exchange. Bartering is an excellent way to rebuild an economy, especially when dollars are scarce.
In a business-as-usual world, you want to best your competition. But what’s the value of that when you’re trying to recover from a historic economic downturn? There’s plenty of time to ratchet up your competitive nature down the road when we’re all well on our way to recovery and growth. But for the moment, the smart play is to focus on rebuilding your business and lifting up the entire community, remembering that your next-door neighbor or the couple down the street may become your best customers.
Here are some things to consider as you restart and rebuild:
- Build predictably. It may take time to recover fully. If something isn’t working, switch to Plan B or C. Be flexible in executing your recovery plan. And remember that you still need to execute well on the fundamentals – service, selection and price – as well as your marketing and customer attraction and retention strategies.
- Watch your bottom line. If a boom indeed happens, don’t go nuts with expansion. Rebuild your cushion, just in case something happens down the road. Capital held in reserve builds resiliency and gives you more options if the economy is a bit uneven over the next few years.
- Build-in redundancies where possible. To absorb a potential boom, make sure you have supply chain vendors in reserve who can step in if another can’t deliver. The same is true with staffing. Flexible scheduling can help you make it through those times when your place is bursting at the seams and then disturbingly quiet.
- Don’t give up on what already works. If your takeout and delivery service is doing well, don’t abandon it just because people can now dine or shop in your establishment. The same is true with e-commerce. If you already have e-commerce on your website, continue to build traffic and sales there. If you don’t have e-commerce, think about adding it. The more channels you have to generate revenue, the more likely you will be able to make it through any future economic challenges.
Finally, enjoy the ride. We’ve all been through some really tough times. As we turn the corner, try to leave the past in the past. You can’t do anything about it. Focus on the future instead. Find that inner entrepreneur that caused you to start a business in the first place and let it guide you faithfully forward to better times.
North of the Emerald City, counting the days when I can visit my favorite places again,