Many entrepreneurs have experienced hard times in business, such as the coronavirus prompting widespread U.S. lockdowns leading to business closures. Getting through challenging times is easier with some advance preparation, so even though this is a painful time to be a small-business owner, it's good business practice to learn a few lessons about how to get through bad times in the future.
1. Build Up a Business Savings Account
Create some financial security in good times by building up a business savings account that can help you pay your bills for several months even if your revenue or cash flow drops to zero. Although it sounds like a tall order, it could be exactly what gets you and your employees through a hard time. Take a look at your budget to see if you can set aside even 5% of profit each month in a savings account. Use it to pay your overhead costs and to give employees paid time off if your business has to temporarily close.
2. Cross-Train Employees
Whether your best employee is going through tough times or you've had to let some employees go due to dwindling finances, you can continue to move forward without a hitch if your other employees know how to quickly step in and perform the other employee's work. Try to cross-train your employees before the going gets tough so that there's no panic or rush to do a lot of work without the proper training. Also, think carefully about who will take your place if you're the one who needs to step away from the business. Consider having a skilled independent contractor on retainer to act as a manager if no one on your team is suitable for the role.
Cross-training simply means that an employee is familiar with how to perform job duties for another role if needed. Your assistant sales manager might step in for the senior sales manager, for example, or be trained to assist as a customer service representative for busy times. Create cross-training opportunities that make sense for your employees and your organization. Allow your employees to practice their new skills regularly with special "switch" days.
Cross-training employees starts with complete transparency and documentation. There should be a record of all login information that employees use for business tools and accounts so that there are no problems with access if someone can't make it to work or is laid off. Employees should also create and regularly update standard operating procedures that relate to their job so that another employee can be onboarded quickly. A typical daily schedule helps as well.
3. Help Employees Understand Their Rights
If you do have to let your employees go during a challenging time, you can still maintain their respect and stay open to a potential future relationship by helping them understand their rights. Give them information about collecting unemployment insurance and provide them with a letter of recommendation before they leave.
Alternatively, you can give your employees time off temporarily. If you can afford to pay your employees during this time, do so, as it will help increase their loyalty toward your company when things smooth out again. If you cannot afford to pay your employees during time off, you are not legally required to do so, and it's important to be clear about this policy so there are no surprises.
4. Prepare Policies for Hard Times in Business
The best way to truly prepare for hard times in business is to develop a contingency plan or emergency response plan. Although it can be difficult to foresee what challenges or emergencies may arise, even a basic emergency plan gives you a starting point. Now that we know that major shutdowns are a possibility thanks to the coronavirus response, you can develop a plan of action to keep your business running in case such an event happens again.
How will your business continue if something happens to you? What if something happens to your major vendors or suppliers? What if your entire workforce walks out on you? What if you are no longer able to run a brick-and-mortar facility?
You'll not only keep your business afloat by having an emergency plan but you'll also gain a competitive advantage if you're able to quickly stabilize your business while affected competitors are still wondering what to do.
5. Understand How to Eliminate Stress in the Workplace
Constant stress is never healthy, but it can become the norm during challenging times as employees worry about their job security, their health or the health of family members, a general economic downturn or any other number of concerns. Have a plan to help eliminate stress in the workplace. Now is not the time to be micromanaging your employees by being a "helicopter boss" or raising your voice.
Do your best to be transparent about the situation with your employees. Should they expect to be let go in a few weeks? Do you have enough liquidity to give paid time off if your business is forced to shut down? Respect your employees by being honest with them during a challenging time.
If you start the workday with a scrum meeting, have everyone practice five minutes of meditation or slow breathing during that meeting. Encourage employees to regularly get up and stretch or do some deep-breathing exercises. As business leaders, it's also important for small-business owners to have an outwardly positive attitude for employees to mimic even if you're stressed on the inside. Help your employees keep the big picture in mind: Difficult times are short term, and things will improve.
6. Figure Out Who Can Work Remotely
Going through hard times in business may mean that you have to temporarily close down your storefront or office. However, the inability to meet in person with your team or your customers does not have to slow down your business growth if you get a little creative. Instead of letting your employees go during a hard time, train them to perform new tasks that will ultimately strengthen your business. If you have the ability to continue to pay your employees, start by identifying tasks that can be done remotely.
For example, most marketing efforts can be accomplished online. Assign someone (or several someones) the task of being the interim digital marketing director who is in charge of sprucing up your website, writing some blogs, creating social media posts, developing email marketing campaigns and more. Another person could manage an e-commerce team that's responsible for photographing your inventory and putting it online either through Etsy, eBay or your own Shopify storefront. Other people could be in charge of researching potential leads or partnership opportunities and reaching out to make a connection.
The possibilities for remote work exist even if you don't typically take advantage of them. Be open to paying for your employees to access new technology or training materials to help them perform these tasks. Give them buy-in by revealing the opportunities and asking employees to write down their top three interests. Then, use their input to help you delegate the new assignments.
7. Talk to Your Insurance Provider
Know how your insurance provider can assist you in an emergency situation. You may be surprised by what's covered. As soon as you experience a cash flow challenge due to circumstances outside of your control, such as a natural disaster or a mandated shutdown, call your insurance provider to talk about a plan of action. A business interruption policy is a good option to investigate if you do not currently have one.