In the last few months, we have heard a lot about struggling businesses because of the COVID-19 Pandemic. It has been devastating, and I am sure all of us want our local businesses not only to survive but thrive, it is only natural. This has led me to spend a lot of time thinking about why some companies will survive the Pandemic, and others simply will not exist after the Pandemic has finished its path of destruction. Of course, the longer the Pandemic lasts, the more businesses will be affected, and we have already seen many companies shutter for good, including brand name businesses such as Hertz, JC Penney, Pier1, and J Crew. These are, of course, brands that we do know, what about smaller, more vulnerable businesses? According to the Wall Street Journal, over 100,000 small businesses have closed due to the Pandemic.
I am sure there are many reasons businesses are being forced into bankruptcy, with the most significant factor during this Pandemic being how much each company relies on income from in-person transactions. Particularly many in the hospitality and retail industries have been deeply affected, but there are other reasons too. Three primary reasons that come to mind as I ruminate about survivability in this challenging business climate:
While many large organizations may have put together large pandemic/disaster recovery plans, smaller companies do not have the resources or profitability to do so. However, with the longest bull market in history, whether being hit by a recession or much worse (a pandemic) as we are experiencing, shouldn’t we have expected things to change for the worse? Well, maybe not this bad, but certainly an end to such a strong bull run? Many of us, who have been through several downturns in the economy, have been regularly thinking about, discussing, and expecting an end to the bull run, especially the last few years. Could anyone have predicted a pandemic? I do not think so. But, indeed, a rough landing after such a tremendous economic period and it felt overdue. How many businesses were prepared?
Companies must be able to adapt to change. We know that many businesses were struggling before the Pandemic. Particularly those in retail in the face of the growth of online shopping giants such as Amazon and Shopify. Those who were late to pivot got caught up in COVID-19; however, it was more of a catalyst than a cause. They just have not adapted quickly enough to changing consumer preference pre-pandemic so that Pandemic exacerbated and accelerating their demise.
Going on about how everything is going to be beautiful and it is all going to be over soon, and the market will skyrocket back up next quarter, stronger than ever is not helpful, it is delusional. And, I am not saying we need to be full-on fire and brimstone either because we all are dreaming of a speedy recovery. Let us take some time to look at the situation as it is. It sucks. And it is not going to get much better overnight; this will take time. We are in a marathon, not a sprint, so prepare for all the pain that comes with a long-distance run. It is not going to be easy, but when you know you are in the race, it’s much easier to accept and bear the pain and accept a longer finish line.
I sincerely hope all the businesses who have been hit by the Pandemic come through; however, we have already seen a lot of devastation in the market, particularly in hospitality, retail, and other service sectors. On one hand, we mourn those who have lost their jobs and brands we have enjoyed for many years. On the other hand, were they as prepared as they could be? Were they facing reality, even before the Pandemic? Did they take the time to adapt to changing consumer preferences? Now is the time to innovate and think about how business can be done differently, as we have seen with many companies adjusting to curb-side pickup, food, and beverage delivery services, moving online, and allowing their employees the flexibility to work from home, as I discussed in a previous article; COVID Aftermath: The New Normal of Work, not only during the Pandemic but afterward. When the dust settles, business owners need to ask themselves if they have the right model for long term survivability in this changing world.