COVID-19 has changed many aspects of our lives. There’s a new need to keep our distance from others and maintain limited access to certain products and services. Things are very different, and, in truth, we have no real idea of what our “new normal” might look like.
This has been particularly challenging for those who own and operate small businesses. While larger corporations may have the resources to weather difficult periods, small to medium enterprises (SMEs) may be operating under more precarious circumstances. This has meant that, in order to strengthen their position and to support their valued workers, owners have been forced to make tough decisions about operating practices and to seek sources of assistance.
What are the challenges entrepreneurs face? What sources of support and damage mitigation are available?
There are few industries that are immune to the effects of the coronavirus. If your business is suffering, it’s unlikely to be because you failed to build a pandemic into your business model. Some sectors are certainly faring better than others, such as the games industry and remote working platforms, among others. It is worth looking at consumer behavior at this time and considering where you can adjust your practices accordingly.
First of all, it’s worth looking at buying habits. You may have started your business with some ideals: to follow your passions, and to operate purely locally or in-person. However, at a time in which consumers are limited in their movements and largely going into stores only for essentials, it’s clear that your focus may need to be shifted to online environments, at least for the short term. According to a recent report, eCommerce spending in the U.S. rose by 30% from the beginning of March to the middle of April.
While it’s relatively simple to set up eCommerce and online purchasing solutions, the shift to online sales also brings the problem of attracting customers. Utilize your social media accounts to let your regular customers know that you’re open to online sales and to boost your customer service profile. Attention also needs to be shifted to raising your rankings in search engines and to utilizing strategies such as search engine optimization (SEO). This doesn’t mean you need to ignore your ideals as a local business; SEO can be used to improve visibility in local markets too.
Tax and Accounting
Business tax and accounting can be complicated at the best of times, and, let’s face it, 2020 has been far from that. Beyond sales, property, and excise payments, small business tax responsibilities include paying Federal Unemployment Tax for employees, and in some circumstances, even facing tax penalties if you fail to offer health insurance. With all of the shifts in employees’ working hours and fluctuating income, certain aspects of tax and accounting processes for small businesses have been altered for the time being.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27, 2020, includes provisions aimed at helping small businesses to stay afloat. Businesses can choose to defer payment of their portion of the 2020 employee payroll tax contributions until 2022. This has been incorrectly attributed to being a tax holiday, which is not quite correct; the contributions still need to be paid, but it gives you a little breathing room.
Many of these tax and accounting measures have been designed to encourage employee retention. As such, the CARES Act also provides a maximum tax credit of up to $5000 per employee. This allows you to keep your employees on the payroll by defraying the costs you incur while doing so. Utilizing online accounting resources at this time can help you to keep track of the changes in your cash flow, and platforms such as the IRS Small Business and Self-Employed Tax Center can provide advice on credits and responsibilities that you are subject to in these fluctuating circumstances.
One of the most significant ways in which coronavirus has made an impact on small businesses is the requirement to close doors entirely. Whether you’re a local retail outlet or a burgeoning tech startup, chances are, the physical premises that you’ve been operating from hasn’t been a practical home base in the last couple of months. Remote working has become a necessary reality for many. While this can certainly have some challenges, there are benefits too.
For some time now, project managers have found that encouraging remote working practices can boost employee morale and job satisfaction, elements which often lead to an increase in productivity. This flexibility can assist in reducing staff turnover and give employees the work/life balance that they value, but you need to keep in mind that you also need to optimize your small business to make sure this approach is practical.
One of the primary challenges is making certain that your employees have access to the hardware required to perform their jobs at home. For data protection and security reasons, it may not be appropriate for employees to use their personal devices. Remote project management software has become plentiful over the last decade in response to the popularity in working this way. Most combine the ability to undertake video calls, instant messaging, and sharing project files via the cloud. This can also present an opportunity to explore other ways in which online spaces can be used to optimize your business practices, such as online invoicing or customer service bot adoption.
COVID-19 has not only impacted many businesses in the short term; there may be more permanent changes that need to be made in order to ensure SMEs thrive. Measures in the CARES act can help entrepreneurs and employees weather some of the worst immediate issues. However, intelligent adoption of remote operations and a shift in consumer focus can make businesses more agile and more robust for the foreseeable future.