Entrepreneurs in Missouri and throughout the country are developing new strategies for doing business during lockdown in order to survive and ultimately thrive in the post-pandemic business world.
The lockdowns, quarantines and social distancing requirements established in response to the COVID-19 pandemic have forced many entrepreneurs and small business owners to put standard operations on hold. It has caused unprecedented demand on business assistance programs through the state and federal government. It has left many entrepreneurs looking for new ways to bring in revenue while working from home or under limited operational capacity.
Businesses must be nimble and creative to find revenue in a pandemic. Tracy James, managing attorney for Legal Services of Eastern Missouri’s Microenterprise Program, recommends looking for new ways to profit through paywalled content and delivery services.
“We’re a nation of entrepreneurs, and we have a long history of being very creative and resourceful,” James said. “I think that even in this crisis, no matter how long it might take, it’s key that entrepreneurs find ways to keep it going, like online clinics.”
Businesses must slim down to the bare bones and look for additional funding to get enough liquidity to stay afloat, James said. But she warns that business owners also must be careful to avoid employment discrimination while deciding which employees to furlough or terminate.
“If you’re letting people go, how are you deciding who is going to go and who is going to stay?” she asked. “It may be good before anything is done to consult with an employment attorney and find out what ramifications the business could have and if there is any personal liability depending on how the business is structured.”
James said it’s important to review contracts and see how defaults and breaches are defined in reference to pandemics, force majeure or Act of God clauses to mitigate risk where possible. It’s also important to connect with landlords and creditors to establish workable repayment arrangements, if necessary, she said.
Kevin Govero, general manager of Strands hair salon in Clayton, said he negotiated with the salon’s landlord to lower the monthly lease for the next couple of months.
Ninfa Govero, the salon’s owner and master stylist, had the forethought to create an online-based program before the business shut down. A week before closing, they started offering $75 coupons that customers may redeem for $100 worth of services or product when the salon reopens.
“[The certificates] have produced quite a bit of revenue for us to pay rent, pay our bills and keep up with payroll until we had to close it down,” Kevin Govero said.
While the certificates are helping the business to get by for now, they are also going to create an instant 25 percent deficit when the business reopens. Kevin Govero said he hopes they will get by until their next busy season in the fall.
“It’s going to be a little trying once we open up, but the benefit for us is our busiest season is September through December,” he said. “We have the best to look forward to, and I think we will be out of it by then.”
Strands also started a curbside product pickup so its dedicated customers can buy root concealers to keep their hair color consistent for virtual meetings. Kevin Govero joked that it may not be long before stylists are considered an essential industry.
“Everybody has a secret dye with us, and when they aren’t able to hide that, they start getting frantic,” he said. “We’ve had several phone call-ins [about] mishaps by box dye and box bleaches.”
Strands clients can avoid those mishaps by picking up their products from the Goveros’ curb and apply them at home. If anything goes wrong, the master stylists are available to help coach clients through the process.
Many small business owners also are applying for emergency loans, such as Economic Injury Disaster Loans offered through the Small Business Administration, said Anastasia Tiedemann, small business counselor for the Missouri Rural Enterprise Center in Kirksville.
The disaster loans offer as much as $2 million in working capital with an interest rate of 3.75 percent for businesses and a possible term of 30 years; the first payment isn’t due until next year. Applicants also can request a $10,000 grant for paying employees’ sick leave, maintaining payroll, making rent or mortgage payments and other purposes.
Emergency loan applications are piling up, so it’s important to reach out to your banker to make sure your application is processed quickly, she advised.
Strands salon sent home 13 staff members and closed its doors March 21 after operating for two decades in the same location. By then, several customers already had cancelled, as people became more concerned about catching the virus.
Kevin Govero said the salon obtained a loan to help with payroll expenses, but he faced some difficulty when later applying for an SBA loan. He said he spent more than four hours trying to apply online, but the system overloaded and he ultimately had to mail in a hard-copy application.
While these times are trying, entrepreneurs who can make it through the pandemic will cement their business and prove themselves to clients and creditors, he said.
“It’s exactly times like these that will either cement your business or it will tear you up and make you go under. So my thought is, as much funding is out there, you can’t go too far under before you’re over your head and you can’t come back out,” he said.
Business owners are now living in a different economy than that in which they operated just a couple of months ago, said Dr. Annette Kendall, an assistant teaching professor and director of the University of Missouri Center for Entrepreneurship and Innovation.
“While many old revenue channels have closed, new opportunities will open in many industries,” she said.
Like many other business people, Kendall’s students are working at home. She encourages them to maintain a dedicated workspace, routine and wardrobe in order to stay focused on their goals.
“While it’s tempting to hang out in sweatpants or pajamas while you’re working from home, it’s important to get dressed every day in clothes that reflect [your] sense of self-worth,” Kendall said. “Wearing sweatpants sends a mixed message to the brain that you’re relaxing. Getting dressed like you mean business tells your brain you’re on a mission to get things done.”
It is also important for entrepreneurs to maintain their networks and work with their lawyers, accountants, insurers and bankers to keep a clear picture of their finances.
Kendall advises establishing a virtual meeting place to find skilled support. She recommended places such as The Hatchery, a co-working space in Columbia that promotes networking between entrepreneurs and offers such community resources as long-term business coaching.
Said Kendall: “Even in the best of times, entrepreneurs die of isolation.”