Not a headline you want to see: Miami metro area in top 10 in U.S. for business closures. But here we are.
In Yelp’s most recent economic impact report for September, which focuses on business closures caused by Covid-19 from March 1 through August, the Miami-Fort Lauderdale metro region had the eighth highest closure count in the country, with just under 4,000 closures.
Among states, Florida had the third most total closures with 7,100 permanent closures and another 3,100 temporary ones.
Nationwide, permanent business closures at the end of August stood at 97,966, according to Yelp’s report. The restaurant and retail sectors have seen the most job loss, and accounted for nearly two thirds of the closures. The report can be found here.
Facebook recently published its latest update of its Global State of Small Business Report, which looks at the impact of COVID-19 on small businesses trying to stay afloat through the crisis. The data incorporates responses from more than 30,000 small business owners across 50 countries, and the data points out U.S. small businesses are not alone in their fight for survival.
“Businesses that made over 25 percent of their sales online were less likely to report lower sales compared to the same 30-day period last year and more likely to report an increase in sales, relative to those with a limited digital presence,” according to the report.
More than 40% of small businesses made over a quarter of their sales through digital channels in a majority of regions. But just 18% of companies that made in excess of a quarter of their sales via digital channels registered a rise in sales compared to the same 30-day period last year.
The closure rates dropped 2 percentage points between Wave II and Wave III, the latest update of the survey, to 16%. Consumer-facing businesses like eateries, cafes and lodging facilities dropped from 19% in Wave II to 15% in Wave III. Download the Global State of Small Business Report here.
For a third view from the small business trenches, 10,000 Small Businesses has been surveying its national network of growing small businesses, including in Miami, throughout the COVID-19 crisis.
In the most recent survey, 88% of small businesses surveyed had exhausted their PPP loan funding and 32% of loan recipients have already been forced to lay off employees or cut wages. Nearly a third, or 30%, said they will exhaust their cash reserves by the end of the year. Black small business owners have been hit harder by the crisis, 43% said they will deplete the cash reserves by the end of the year.
But we here at Growbiz have been reporting on small businesses that have been pivoting or developing additional revenue streams to survive the crisis and thrive on the other side. We have been bringing you information on relief programs and stories focusing on strategies for these unprecedented times.
Here are some of the lessons learned from our South Florida entrepreneurs and advisors about what they have been doing to get to the other side of this crisis so they can begin growing again:
Reach out to your customers and find out what they need
It is easy to blame COVID-19 for everything, but get your head out of the sand. You are responsible for understanding why customers are no longer buying from you. And some businesses have been doing that, and adjusting their businesses.
Go to your previous clients and ask them what their new needs are and how you can help them. If you are a B2B business, try to also understand your clients’ clients’ pains and gains “and that will open you to a whole new world,” said Adriana Madrinan, a consultant in business strategy for Florida SBDC at FIU. “We really need to understand the whole chain.” As you are thinking about what you can offer to your clients to meet their new needs, this is the moment to leverage your strengths and turn your weaknesses into strengths, Madrinan said in a recent post.
Start by looking at your customer data and reaching out to past customers. Use the human touch, call them if you can. Analyze the conversations about what your customers need and are willing to spend money on and the answer the question “Do my client’s priorities align with my offering?” If the answer is no, you will likely need to innovate to survive.
To stay relevant, you may need to pivot
By knowing your strengths and weaknesses as well as what your customers need now, you can look at what you can offer. Don’t waste your time on offerings that are not meeting the new needs. But if you have weaknesses in delivering, you will have to build capabilities that you are missing but only if they are related to the new needs, Madrinan advises.
Then create an action plan, Madrinan said. During COVID times, do an action plan for three months out, rather than a year. Identify the obstacles that are blocking you from getting to the next level and come up with three actions to get there for each. Or you can break down your action steps by months. Review your plan at least weekly.
Sometimes the pivots will be short-term, such as a new boutique hotel turned itself into a quarantine shelter during the pandemic, with a government contract. Sometimes they could be short term but turn out to be sustainable for the long-term, like the fish business that sold to restaurants but shifted its focus to home delivery while restaurants were largely closed. But now it plans to continue with home delivery as another revenue stream. Another example: the window film manufacturer that started a line of face shields, and plans to continue with it as long as there is a market.
Don’t jump into a new opportunity too quickly without a strategy, because you risk disappointing your customers and losing them for good. Remember that customers buy to meet their needs — not yours.
Look to partner up
We’ve seen examples of this throughout the COVID crisis. The grocery store that agreed to hire the restaurant’s excess employees during the pandemic. The neighboring eateries that shared staffs to get by. Joint marketing partnerships and municipal campaigns that promote small businesses. These partnerships result in a win-win for all.
During the disruption, you may not have a complete offering that someone is willing to pay for, but you may have part of an offering that someone else’s customers need. This is a great time to collaborate and co-create new services with others. Consider potential partners who you can work with to develop offerings that are in demand now.
Exercise a strategic mindset
As a business owner, you need to be able to look past the current crisis and plan for the future as well as reacting to the current situation. Even if your clients are not buying now, do you know if they will need your services after the pandemic? Do the research.
If customers are not buying, you must do the work of finding what they need so you can pivot and provide what they are willing to pay for. That is only way to survive – and thrive again.
Last but now least, keep a sharp eye on cash flow
Organizations such as Florida SBDC at FIU, Accion, Prospera, Miami Bayside Foundation, SCORE and others offer one-on-one business consulting, workshops, trainings, even access to loans in some cases. Their programs are virtual now and often free of charge — take advantage of the community resources.