- March 27, 2020 12:21 pm
Last Updated: 03/27/2020
Note: This post will be continually updated as additional resources become available.
The timeline for social distancing and the length of the impact that will have on our economy is unpredictable. The negative impact could last for several months (3 to 6 months) or it could last for many months (6 to 12+ months). Think about what you would do today to enable your business to withstand a crisis that could last as long as either one of those timeframes.
Regardless of what happens with the virus and our level of social distancing, a recovery in confidence and spending will take time, so expect a prolonged period of at least slightly reduced demand compared to pre-crisis levels.
In China, where the virus has been contained, a return to fairly normal operation has occurred. As cited by HBR:
“Unsurprisingly, sectors and product groups recover at different speeds, thus requiring distinct approaches. Stock prices fell across all sectors in the first two weeks that China’s epidemic accelerated, but leading sectors, such as software and services, and healthcare equipment and services, recovered within a few days and have since increased by an average of 12%. The bulk of sectors recovered more slowly but reached prior levels within a few weeks. And the hardest-hit sectors — such as transportation, retail and energy, representing 28% of market capitalization for China’s largest stocks — are still down by at least 5% and showing only minimal signs of recovery.”
Some businesses can pivot from an offline to an online operation, operating virtually, selling products through e-commerce websites, or transitioning into a new line of business that is in particularly high demand right now (see “sectors positively impacted” below).
Operating virtually will be a change for many entrepreneurs and their customers. However, operating virtually is becoming the norm during the crisis and therefore customers are more likely to work with you virtually. This includes meetings through phone calls or video conferences (using services like Zoom).
Most sectors have been negatively impacted by the crisis. This includes companies that provide services or sell products to both consumers and businesses.
Consumers have retracted spending while they wait to see if their incomes will be reduced by their employers due to layoffs and salary reductions. Consumers are also seeing their savings decline due extremely negative performance in the stock market. It will take time for consumers to regain their confidence. It is expected that spending for consumer goods will rebound in China in the second half of 2020 because they got the spread of the virus under control fairly quickly in the first quarter of 2020. The United States has been slow to respond to the spread of the virus, and as such, the recovery of consumer spending may not happen until 2021.
Many businesses are seeing their revenues decline due to a disruption in their normal business operation. As such, businesses that rely on other businesses to give them income, such as consultants, have seen a delay in new project starts and a slowdown in sales. Some have seen their existing contracts get cancelled as businesses take more aggressive cost cutting measures.
Looking at what companies have done in other countries that have had the virus for longer is helpful for finding ideas on how to pivot your business to be more resilient during the crisis.
Some businesses are unable to operate at all when there are shelter-in-place and heavy social distancing orders. We’ve seen that customers who provide trade services to consumers have had a hard time operating because many people don’t want people they don’t know entering their homes.
You started your current business because you had passion for your idea. The drastic change in the economy will pass. In the meantime, the easiest way to supplement your income may be to get a part-time job that helps you pay the bills. This gives the economy some time to recover and get back closer to normal operation, at which time your business may flourish.
Some potential part-time jobs to consider during the crisis to supplement your income can be found here:
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