The full impact of the 2020 coronavirus has not been realized…
As of April 21, we are more than one month in and there are 22 million people filing for unemployment, a 50% drop in local businesses being open, and a 60% drop in hourly employees working, according to live data updated daily by tech company Homebase.
In the years to come, economists are going to be studying the financial impact that COVID-19 has on the world. Certainly, we’ve never seen anything like it.
There is plenty about this health crisis that neither you or I have any control over. But there are things that we can do and things we can learn from this, so what I want to do here is highlight these opportunities, especially when it comes to larger businesses sell to small, minority- and women-owned businesses (sometimes called B2SMB). Many are taking steps in the right direction to help businesses and individuals survive this crisis, but we can all do more.
Each of us, from individuals to communities to big businesses, must do more to support our small businesses and the devastating impact COVID-19 is having on the worldwide SMB community.
Small businesses don’t have the same safety nets that larger corporations have. They don’t have typically have extensive capital reserves, huge rainy day funds, and robust credit lines that enterprise-level organizations have, which is why small businesses need our help now more than ever before.
Why Large Companies Should Care About SMBs
Big businesses should care about small and midsize businesses for two important reasons.
One, they’re very likely contributing to your revenue and success. They provide goods and services that you need to run your company. Look at your supply chain: How many vendors, suppliers, and partners employ fewer than 500 people? Fewer than 100? Could you thrive without their goods and services?
Two, small businesses are responsible or 65% of new jobs in the United States, according to The Balance. Without small businesses, our economy will not recover and continue to grow.
Economic Impact of Small Businesses
To truly understand the economic impact of small businesses, the following numbers show how they contribute to job creation, economic activity, and the U.S. GDP, according to the Small Business Association (SBA) and the Small Business and Entrepreneurship Council.
The SBA reports that small businesses …
- Create ⅔ of net new jobs in the United States
- Account for 44% of U.S. economic activity
- Employ 33.4% of private-sector payrolls (firms with fewer than 100 employees)
Small businesses have proven to be leaders in innovation, which we can measure based on patents — the SBEC says small businesses represent about 96% of firms in high-patenting manufacturing industries.
Unfortunately, HBR.org conducted a survey this month (April 2020) of more than 5,000 small business owners and found that 60% expect to reopen by end of 2020, but 40% say it’s unlikely. If these projections turn out to be true, the innovation of these businesses and the benefits of those innovations could disappear and be lost forever.
Economic Impact on ‘Missing Businesses’
Brookings recently published a report reviewing how economic crises impact minority and women-owned businesses, which they refer to as MWBEs for short.
They explained that the Great Recession of 2008-09 disproportionately impacted WMBEs. For instance, they experienced more job losses than white-male-owned businesses. Interestingly — and this is why enterprise-level organizations should care about the survival of not only small businesses but also women- and minority-owned ones — during the recovery from the Great Recession, these firms added more jobs than firms owned by white men.
For those of you who like numbers, the next two sections explain what happened to minority- and women-owned businesses during the Great Recession over a decade ago. What we can learn from these statistics is that although MWBEs (minority, women business enterprises) are more likely not to survive an economic downturn, (a) it doesn’t have to be that way and (b) these businesses are vital to economic stability throughout the country.
What We Can Learn from Women-Owned Businesses and the Great Recession
Women represent about 51% of the population in the U.S., but they represent only 33% of business owners. Women-owned businesses generate only about 64% of the revenue that their male-owned counterparts do, but only 55% survived the Great Recession (compared to 61% of their white-male-owned counterparts).
What We Can Learn from Minority-Owned Businesses and the Great Recession
Minorities represent about 40% of the U.S. population, but only 20% of business owners. Minority-owned businesses also generate less than white-male-owned businesses. Hispanic/Latino-owned businesses average 74% and Black-owned businesses average 41% of revenues of their white-male-owned business counterparts. About 49% of Black-owned businesses survived the Great Recession of 2008-09 (compared to 61% of white-male-owned ones).
So, what can big brands do to help their small-business counterparts survive?
Be a True Resource for SMBs
Help begins with a very simple question:
What do you need?
Reach out to your suppliers and small businesses within your supply chain and check-in. Ask them how they’re handling this unprecedented time and ask them what they need.
Also, ask them about their full suite of services and/or products that they offer. You might be surprised to learn that your suppliers offer things that you weren’t aware of. Given that many companies are short-staffed or have team members struggling to stay productive at home, your current suppliers may very well be the resource you need to either stay on course or pivot your own business.
We created a resource page designed to help businesses help each other. It’s called, “How the B2SMB Community Can Support Each Other During the COVID-19 Crisis,” and it is packed with links to helpful resources.
But it was only a start. Launching a page with a bunch of links is can be useful, but anyone can do that, and frankly, everyone is doing that. It’s not enough.
How can you differentiate yourself from other organizations that are helping small businesses?
Put your money where your mouth is, as the cliche goes. These SMBs need strategic advice, mentoring, and access to resources that can help them survive economic devastation that is unlike anything they’ve seen. Now is the time to fully step into customer-centric, education-based marketing. Rest assured small businesses are paying very close attention to your brand, how you show up and how you help them. How do you want the small business community to remember your brand after the COVID-19 health crisis has passed?
The first step to being a true resource to your small business colleagues is to ask, “What do you need?” The answers you get will vary, but typically there are four ways small businesses are affected by economic crises, which I’ll explain next.
Top Ways SMBs are Affected by Crises
Small businesses are affected by crises in a number of ways, but four common ways are listed here, which we gathered from our own experience, as well as information shared on the Small Business Administration’s website.
- Limited or no access to capital, which can make it difficult to pay employees, maintain inventory, and pay suppliers. I have heard stories like the one in the screenshot below from small business owners who can’t get help — let alone answers — from their own banks. How you can help: Extend credit lines or payment terms, look for innovative ways to barter in exchange for goods and services, and simply ask your suppliers and SMB partners what they need.
- Lack of resources for clean-up and sanitization. During any tragedy, local businesses have to protect their properties, inventories, and employees; likewise, after the current tragedy, depending on the damage, they may need help keeping their facilities clean and decontaminated. How you can help: Ask your SMB partners how you can help them restore their operations so they’re sanitary and safe. How can you share your supplies, people, and processes to help restore their facilities to safe operations?
- Inability to shift to changes in market demand. Just as the tragic events on September 11, 2001, changed the way we travel and the 2007-09 recession changed the way we borrowed money, COVID-19 is guaranteed to change the way we interact with each other and the environments in which we work and conduct business. How you can help: Help your SMB partners find resources that will help them protect their employees and customers when future crises arrive. How can you educate them and connect them with resources that will help them survive during a crisis?
- No budget for marketing. One of the first areas that companies cut or stop during economic downturns is marketing. We get that — it seems like low-hanging fruit that can easily be stopped and re-started. Yet, we disagree — there is no better or more crucial time than the present to maintain your marketing efforts, even if that means totally revamping them. How you can help: During an economic slow-down, partner with your SMBs to help them offer incentives to their customers. Do they have the right tools, knowledge, and processes to communicate in a virtual world? If not, how can you help them build that while they prepare for what may potentially be “a new normal”?
CRM platform Hubspot, for example, has slashed its monthly prices by more than 55% to $50 per month for one of its software bundles that are designed to help build and nurture leads. They’ve also suspended email limits so their clients can maintain communications with their customers, followers, and fans.
Quickbooks (an Intuit company) partnered with GoFundMe and Yelp! to create a Small Business Relief Fund that will issue micro-grants to companies that are hurt by COVID-19. Each company seeded the fundraising campaign with $500,000.
Of course, both Google and Facebook have generously committed funding and support to the small business community — Google by way of ad credits, and Facebook is offering cash grants and ad credits.
Can you imitate the immense value offered by Hubspot, Quickbooks, GoFundMe, and Yelp! and start a relief fund in your own community?
Go Virtual for Meetings and Events
We’ve seen an increase in demand for virtual event support, especially as companies adopt a remote-working policy during this pandemic. Even before March 2020, we saw more and more companies shifting toward virtual technology to support their distributed teams, connect with new customers, and produce amazing online events.
Companies are seeing the value in remote workers, and the technology needed to support remote working is better than ever, thanks to cloud-based platforms that support video conferences, collaboration, and building an audience online.
We recently posted an article about how businesses can be successful with virtual events and meetings, which you will find helpful. Here at Smart Simple Marketing, we have been producing profitable virtual events small and large since 2008, so we know their value! Feel free to reach out to us for details on our case studies, testimonials, and insightful examples of how large brands use virtual technology to increase market share with SMBs.
Bottom Line: What We Did (and You Can Do)
Small businesses are the backbone of the U.S. economy. They provide millions of jobs and inject money into the economy. If small businesses don’t survive the current economic crisis, it will have a rippling effect on the economy. No one will be unaffected.
What big businesses can do — what they must do — is reach out to their small business vendors, suppliers, and supply chain partners and ask, “What do you need?”
We know this to be true because it’s exactly what we did for our own small business community. Based on the feedback we received, within a few days, we organized the Thrive NOW™ virtual summit – a full day of advice, strategic insight and inspiration to help small businesses can survive the coronavirus pandemic. We brought in guest speakers to talk about legal issues, working remotely, emotional health, shifting your business model, and improving your online presence. Hundreds of small businesses attend our virtual summit and received the support they need to keep moving forward!
So, let me ask you this, “How can we at Smart Simple Marketing help you?”
Let’s schedule a time to talk. Our content marketing strategy, content creation, amplification or content marketing training solutions may be the exact resource you need to pivot and stay on track with your goals during this critical time.