There is opportunity in every crisis, and the COVID-19 pandemic has created a crisis for many small business owners that is unlike any other before. The coronavirus has forced governments into enacting what some are calling “the Great Lockdown.” The lockdown consists of closing all non-essential businesses, limiting and, in some cases, eradicating opportunities for many small business owners to generate revenue.
Entrepreneurs today are now faced with the challenge of identifying business opportunities that are valuable enough for customers to purchase despite facing a public health and economic crisis. In addition, entrepreneurs must be motivated enough to both act on the opportunity and to acquire the resources needed to fulfill it.
As an expert in entrepreneurship and innovation, I argue that business models must strategically pivot to meet new consumer needs, while remaining true to their core values. Customers are facing more hardships than ever before in recent history. During the Great Recession that occurred between 2007 and 2009, millions of people lost their jobs and homes. As a result, customers reduced spending on discretionary and luxury purchases. While the Great Recession was bad, it is essential to understand that the COVID-19 pandemic is a different kind of disaster.
As of April 16, over 20 million Americans had filed for unemployment, more than the number of unemployed Americans in the two years of the Great Recession. Customers are now fearful of spending money because they do not know when the chaos caused by COVID-19 will end.
Despite these challenges, some customers are looking to spend on discretionary and luxury purchases at a lower rate. Recent articles convey spikes in consumer spending on comfort-related products, like pajamas, houseware and services, such as landscaping, coffee subscriptions, telehealth services and fitness equipment services.
This spending is occurring because many customers see the potential economic downturn as an opportunity to save money on things they simply desire but do not absolutely need. In an effort to help small business owners tap into that consumer base, I have outlined some strategies below to help business models meet the new and evolving needs of current and new customers.
Strategic Planning and Customer Discovery
The world is changing rapidly, but (flexible) planning is still important. Small business owners should be engaging in strategic planning that weighs different business and economic scenarios over the next two weeks, two months and six months. Since this pandemic emerged, it has changed our social and economic world on a daily basis. Make a plan, but plan for different scenarios and consider conducting a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis and a Threats, Opportunities, Weaknesses and Strengths (TOWS) matrix (examples below) to help you strategically plan during this time.
In your plan, develop a strategy for discovering target customers using tools, such as Steve Blank’s customer discovery process. Once you identify your target customers, make sure you have a solid understanding of their needs and understand that your business may need to pivot in some way to meet them.
SWOT Analysis Example
TOWS Matrix Example
Research Small Business Resources
Dedicate some time to identifying available resources for small businesses and completing applications for them. This Forbes article outlines various funding opportunities for small businesses. However, also look into local resources from family foundations, government agencies and local entrepreneurship hubs.
Some of the grants available for small businesses affected by COVID-19 include:
- New Jersey Economic Development Authority
- Westchester (New York) COVID-19 Response Fund
- Northern Manhattan Emergency Recovery Fund
- Various Individual and Organizational COVID-19 Grant Opportunities
A Note for Policymakers Seeking to Help Small Businesses
While a number of government offices have created small business loans to help owners cover expenses incurred due to COVID-19, grants are a more effective funding source to help businesses in the long-term. Businesses that depend on social interaction (e.g., restaurants, gyms, coffee shops, laundromats) still need funding to cover fixed expenses, like rent, insurance, salaries and utilities. If they take out loans to cover such expenses, while generating little to no revenue, they risk going into deep debt.
Being that we are uncertain when this crisis and its subsequent lockdown will end, businesses should not be advised to go into debt. Instead, recovery grant opportunities that cover fixed expenses should be developed for businesses struggling due to COVID-19.
Pivoting—The Lean Startup Methodology By Eric Ries
If you have not read The Lean Startup by Eric Ries, you definitely should. A main takeaway from the book is knowing when to pivot and when to persevere in your business. Specifically, entrepreneurs should know when to shift their business models to meet customer needs and when to continue with a seemingly failing idea in the hopes that it will eventually make progress. While I could outline the various ways that a business can pivot, this article already explains the different types of pivots in detail.
Once again, there is opportunity in every crisis; however, sometimes small businesses need to strategically pivot their business models to discover and meet evolving consumer needs. First, develop a short-term action plan with different scenarios to guide you through the next few weeks and months. Then, research the list of available resources in this article and beyond. Take the time to apply for these resources. You will not receive a COVID-19 small business relief grant if you do not apply for one. Lastly, think deeply about how your business will pivot in order to meet new customers—and then act. Apply these strategies with the goal of surviving, if not thriving, as a small business during the COVID-19 pandemic.
This article is supported by the Scholars Strategy Network New York City chapter.
Dr. Rasheda L. Weaver is the first assistant professor for the new Hynes Institute for Entrepreneurship and Innovation at Iona College and is the founder of Weaver’s Social Enterprise Directory, a national public directory for social enterprises.
