By John Alec Stouras
So, You Want to Start a Small Business During a Pandemic...
With all of this time sitting at home, I’m sure your entrepreneurial spirit has risen to new heights. All of those ideas jotted down on paper, typed on the computer, seem to breathe new life when you spend days cooped up inside. Your thoughts are as high as the clouds, and here at Legalucy, we love to see small business owners thrive. The first thing is to take into account is what challenges you will face because of the pandemic; the rest of the considerations will follow after you answer the first one.
Let’s talk about the pandemic. We are living during the first time an epidemic has taken a significant hit on the global economy. The first time it happened in the modern era was the smallpox pandemic at the turn of the century (pejoratively called the “Spanish Flu”), but this was before the world and economy we know today was even conceived. SARS/MERS and Ebola didn’t hit as hard as COVID-19 because we isolated the outbreaks, and businesses in the United States did not need to adopt strategies. While companies are scrambling to figure out how to handle the current pandemic, you are in the perfect position to figure that out before you launch your business.
Still not convinced? Debbie Chu, a lawyer from the Washington D.C. area and doing pro bono work for the Legalucy team, states that there are actual metrics that show this is a great time to start a business in particularly high demand areas, such as liquor and alcohol sales. You can find the entire transcript on the podcast Think Outside The Firm hosted by Harmony Oswald and Ginny Townsend.
One of the first considerations you should be thinking about is a business that is sustainable during this time. Think about what type of companies would stay viable during this time and what wouldn’t. Here are some ideas that might help you get started.
There are six essential inquiries that you will need to address before launching your business idea. This list is by far non-expansive, and you will need to think about many other logistical questions, but these six will get the ball rolling.
Diversification of Market
Because of the pandemic, many business models that promoted what was called “singular competency” (a.k.a. being excellent in one area) have begun to falter. The reason for the singular competency model failure is because they failed to diversify by placing all their eggs in a unique basket that could not withstand the business, social, and economic situation the pandemic has put us in. For more information, click here.
So, when launching your business, think about diversification, what various avenues your business could take on at the same time. Sure, it may be thinking far ahead, but if your business is to survive during the current pandemic world as well as the post-pandemic world, diversification is a must.
Let’s see an example of a diverse business. The way to achieve a diversified company is by creating new products that penetrate your existing and new customer base. It allows you to place eggs in multiple baskets, leading to a lower risk of losing all your eggs in one fell swoop. For example, let’s use an online wine distributor that just launched her first business. She starts it and thinks about other areas to enter. One might be tasting rooms when the pandemic is over, which allows her to have both a physical presence and an online presence eventually. This diversification strategy spreads money over both businesses and provides a new service alternative. Let’s say she begins to think that her companies aren’t that diverse because the service is very similar to her initial product. Maybe she attempts to push into the beer market as well, as it is usually a different customer base. Though many of us have drunken wine and beer during the same time, many of us have a preference as to which one we choose on a day-to-day basis, therefore forming different customer basis.
Any possible way to spread your eggs out is diversification’s objective. Make all of those eggs profitable, and you have a business that’s one step closer to pandemic proof.
A Pandemic Response Plan
A Pandemic Response Plan is a no-brainer. To prevent the same flailing around, we’ve seen in the current business climate, create a business plan for a future pandemic by laying out how to respond. For past and present business owners, this will involve some painful reflection about what happened and what you could’ve done better. That is okay! It is all a part of the learning process. For a new business, this involves a new way of business thinking. Let’s create a couple of ideas together as to what a pandemic response plan could look like. To show you an example, this is the CDC’s (Center of Disease Control and Prevention) federal resource page for planning around influenza pandemics. For more information, click here.
It could and should very well include a couple of resources:
· A list of federal and state-level funds that you will receive information on business conduct restrictions and regulations during a time of the pandemic
· An actual plan of steps that your business will take to revert to online and take-out and drop-off measures
· A list of essential employees that will be necessary to carry on your business if and when a pandemic occurs (a skeletal team)
· A list of business connections of your suppliers, vendors, lawyers, and so on.
These are all great resources to keep on handy in one document that is your game plan for the next pandemic.
Another important document to create is a step-by-step instructional guide for the future “you” to take when a pandemic occurs again, and what to do right now for your business if you are currently launching. A good step one is launching your Internet presence. Another critical step is to see how your supply chain will work and which suppliers are still willing to assist you in your new endeavor, as well as which vendors will take on your business. And if your business is directly serviced to customers, how will you allow them to come to your company and still follow all health, pandemic, and social distancing guidelines. Leave nothing to chance in your Pandemic Response Plan, whether you are launching your new business or if you are currently running your small business.
A Look at Your Market and Customer Base
This is an easily overlooked topic. Knowing your audience is something we all do when launching and sustaining a business. Now I’m asking you to dive deeper and put your analytical marketing hat on. Look at how your customer base has changed due to the pandemic. Has it shrunken, grown, or changed locations? Do customers prefer to go to your business locations with a mask on? Or do they purely do online shopping and home delivery? Here’s another excellent example showing how pandemics can affect your customer base.
Let’s say you are targeting a customer base of pregnant mothers. Many would not risk even going to a physical location because of their immune systems and their unborn baby’s safety. Therefore, you know you likely won’t get any traction at a brick and motor location and will be operating a purely online shopping and home delivery service. Additionally, if your business is region-specific, look online for trends on how your customer base has been shopping. Further, is what they are buying and you’re offering in high demand or low demand? These are all valuable considerations to think about as you address your customer base.
Starting a new business often means having an office! Luckily, you can still rent office spaces and have employees. However, there is still a lot to consider if you plan on taking employees or independent contractors outside of just making sure they all do not subject themselves to paranoia and contracting COVID-19.
A very modern layout that has spun in the United States since the late 20th century is open office layouts (also called open plan/open concept). No barriers between desks, public walkways, and less walled corridors. It was a part of a movement to allow bullpen style workstations to promote “knowledge work” and to allow a higher flow of communication. Though because of their open spaces, they may be hotbeds for germs and illness transfer between employees.
I’d highly consider you do not choose an open floor plan for your new office. This decision will not only give peace of mind to your employees but also to you. Even with the implementation of masks, COVID-19 can remain on services for an extended period, which means lengthy sanitation procedures, and a likelihood of a high coronavirus transfer rate at an open-plan office space. Think of choosing a layout that places office and cubicles, as well as walking areas that allow people to keep a safe distance from one another (so, no narrow corridors).
If that didn’t sell you, there is scientifically proven evidence that open-plan offices lead to higher blood pressure, stress, conflict, and high staff turnover, according to a Queensland University of Technology study. A happy employee simply helps create a successful company. Therefore, look for different types of office plans that are alternatives to the bullpen style layout.
Healthcare, paid leave, and salary are very heated topics at the moment. If your business is going to carry any type of medical insurance, contact your insurance agency and make sure you fully understand how your coverage is going to be used during the pandemic. Further, you’ll likely need to start saving money in your coffers right now if you plan on taking employees, as paid leave time will be used more frequently during the pandemic.
Another critical point of emphasis is salary, which by now, many unemployed individuals know the rate they’ll receive via unemployment benefits. If you aren’t going to pay them more than unemployment, they will not bite at your employment opportunity. You may have to consider raising your base rate of pay during this period. It is a cold truth, but if you recruit well, it’ll be an excellent investment in a fantastic employee you find! Also, evaluate what positions are replaceable and which are not. Some employees will not be needed for your skeletal team, which you will need to keep in mind. While others, or even some of the hard-working employees whom you may deem to be “replaceable,” are not replaceable because of their contributions to your team. You will need to keep them in mind as well.
Having a good lawyer in your address book never hurts any business. They have saved some enterprises and have made others thrive! Many business sales and order contracts contain a force majeure clause. A force majeure clause allows a party to not perform the agreement in the event of a natural disaster, war, and as our case, a pandemic. They are often read very strictly because the consequences of not performing are significant. There are tons of great contract lawyers in whatever area you are in. If you are trying to enter the tech world, firms such as Wilson Sonsini and QWCooper in the San Francisco Bay Area, often deal with business contracts and can help you in either way. The point is that you may have to look into this provision because it’ll probably apply whenever pandemics occur. You will want to have your back covered just in case.
There are many other things to keep in mind when launching a business during this period. Either way, these points will help get the ball rolling and assist you wherever you may need it involving business development strategy, the office space, and staffing.
Are you interested in launching or sustaining a pandemic proof small business? Spot issues, take action, stay safe, and thrive in a post Covid-19 world with Legalucy. Learn more at thelucyreport.com
Your interaction with Legalucy and mypandemicproofbusiness.com does not create an attorney client relationship. We provide information for your reference only. Such information should not and cannot be construed as legal advice. For more information, please contact email@example.com.