COVID-19 has completely changed the landscape for small businesses. Many of them have had to adapt overnight to brand-new regulations that upended the way they had conducted business for years, and others have had to shutter due to loss of revenue.
While it’s no doubt a challenging time to launch a business, there are some tried-and-true fundamentals to starting one that can help you find your footing in this new world. We’ve also gained newer principles—lessons learned from this pandemic and new generations of consumers and workers—that can serve any business well.
We’ve pulled together both these traditional and newer business fundamentals to help you launch and keep afloat a small business in any industry.
Today, we’ll cover:
- Pay attention to economic indicators
- Learn basic business skills… and when to delegate them
- Stay focused on the financials
- Location is more important than ever
- Understand your legal and municipal responsibilities
- Keep your plans simple and goals realistic
- Center the customer
- Place value—and resources—in marketing
- Remain flexible and ready for change
- Culture matters
What are “business fundamentals”?
Business fundamentals are a set of time-tested principles for running a successful business. As you’re about to see, some of these fundamentals have been in play for a long time, while others have become more vital only in recent years—or even recent months, due to COVID-19.
10 business fundamentals for a post-COVID-19 economy
1. Pay attention to economic indicators
There’s a common theme throughout these fundamentals: denial kills businesses. Sometimes, the truth is a bitter pill. Maybe the economy is in recession, or the cash isn’t flowing in like you thought it would be, or foot traffic you counted on hasn’t delivered. (Or maybe all three of these are true.) Without understanding exactly what is going on, though, it’s nearly impossible to fix.
It’s important to understand and keep an eye on what’s happening in the economy overall and how it’s affecting you and other small businesses. This attention to reality might help you anticipate and prepare for future downturns or better position yourself to handle a black swan event (like a global pandemic) that comes out of nowhere.
Here are a some economic indicators to keep an eye on as a business owner:
- Employment and personal income: Low unemployment and higher income over time in your region are both indicators of a stronger economy. When unemployment starts to rise and salaries fall behind the rising cost of living, the economy is most likely in trouble.
- Household debt shooting up—mortgages, cars, credit cards—is another indicator of economic trouble, and it stands to reason. It means people have less cash to spend but still have bills to pay and need reliable transportation, so they’re relying more on credit. This can mean people are spending less on eating out, entertainment, and other “extras,” which can be bad for business.
- As you can probably imagine, increased consumer spending is good for business. It means folks have disposable cash to burn, and that’s usually a sign of a booming economy.
- Real estate: This one is especially important if you have a physical storefront, but it’s good to know how your region’s market is doing even if you only sell online. Is it a buyer’s market or a seller’s market? Are commercial properties hot commodities or being reduced? Has there been an uptick in foreclosures? Look at both historical (last 10 years) and recent trends to better understand your local real estate market.
Not sure how to track these? You can follow most of these indicators via the Bureau of Economic Analysis. Some regional Federal Reserves also offer excellent data, such as the St. Louis Federal Reserve’s center for economic data.
2. Learn basic business skills… and when to delegate them
Every small business owner should have a basic understanding of the following skills:
- Accounting and financial management: “The books,” as they say. Learn what you should be tracking and how to read the data and what software you can leverage to automatically create reports from the numbers.
- Strategic thinking and management: It’s important to know how to lead strategically. Learn how to create, implement, and stay accountable to a multi-year strategic plan.
- Managing a team: You can’t do this alone, so you might need to brush up on the skills it takes to lead and manage people. These include hiring and onboarding, conflict resolution, negotiation, building trust, recognition of good work, active listening, and inclusion. Today, this might also include how to run a remote team since so many businesses have been pushed online.
- Sales and marketing: These are two complex but important pieces of your business’s foundation. Learn how to develop and implement a sales process and create inbound and outbound lead generation strategies, or at least how to understand sales and marketing reports if you hire experts to handle these areas.
- Supply chain management: If you’re selling products, you need to understand every step of the supply chain for these products: where and how they’re made, what the products are made of, how they get from the warehouse to the customer, what the packaging looks like, et cetera.
This doesn’t mean you have to be an expert in all of these areas. It would be hard to find someone who is, since they’re each a very different set of skills. If you do decide to outsource some of these skills to a professional, it’s a good idea to have that professional teach you how to read basic reports and see problems coming, so you know when to reach out for help.
3. Stay focused on the financials
Financing a new business and achieving steady cash flow are more important than ever in a post-COVID-19 economy. The recession means there is less money to spend, both on investing and on non-essential goods and services. Here are some ways you can find funding for your new venture, even in an economic downturn:
- Self-funding: Maybe you’re lucky or savvy enough to have the money you need to launch stashed away in your savings account or a cashed-in 401(k).
The upside of self-funding: You’re beholden to no one else when it comes to decision making.
The downside: You assume all the risk and responsibility for the business by yourself… and cashing in that 401(k) can extinguish hopes of retiring at a reasonable age.
- Small business loans: If you can’t fund your idea yourself, it might be best to go for a loan from a bank or credit union. You’ll need a solid business plan and some other documents to secure one. Be sure to shop around to get the best interest rate before making a decision.
The upside of a small business loan: Just like with self-funding, you will stay in complete control of business decisions and retain all the profits yourself.
The downside: The loan will need to be repaid, with interest, within an agreed-upon period of time, no matter how your business is doing.
- Finding investors: Whether it’s people you know personally who believe in your vision or venture capitalists on the lookout for the next big thing, investors can be a great source of upfront funding for your company.
The upside of investors: Their funding isn’t usually a loan, so you don’t need to worry about paying them back in a certain amount of time, with interest. Plus, the right investor might have the experience and knowledge you lack, and their involvement can help you grow more quickly as a business.
The downside: They usually want their payback in the form of equity, or a piece of your profits, as well as some influence over decisions made, which might be at odds with your vision for the business.
- Crowdfunding: As a newer form of funding for small businesses, crowdfunding relies on donations of all sizes from family, friends, and even strangers who are interested in helping get your business off the ground. Startups build their business case on sites like Kickstarter and Indiegogo by clearly stating their mission, vision, and funding needs, and people from all over kick in money to make it happen.
The upside of crowdfunding: Just like other investors, money raised via crowdfunding isn’t a loan. People who donate understand it’s just that, a donation, and they don’t expect to get their money back.
The downside: Be careful when it comes to setting your goal! Some sites will automatically return pledges if you don’t hit that number. And while crowdfunders don’t expect equity in your company, it’s standard to create “perks” for these donors: small gifts or benefits that increase depending on the level of donation. This can be a time-consuming and expensive undertaking, so think carefully about what you’d like your perks to be, and ensure that you can deliver on them.
For any of these types of funding, it’s important to know how much money you need upfront to start your business: a clear dollar amount to share with your funders. Even if it’s your own money, create reasonable projections for spending so you’ll know if you need to find outside help.
remote-ready business in 10 steps
4. Location is more important than ever
Where to put a new business has always been an important decision for any new venture. But today, in the wake of COVID-19, small businesses have had to adapt to new health regulations and social distancing. This has been a huge pivot, as many have had to go either partially or completely online to keep their doors open: potentially forever.
Does your business need a physical location, or can it thrive online? Here are some things to consider for both scenarios:
Finding a brick-and-mortar location for your small business
As you shop for your very own storefront, it’s a good idea to keep these questions in mind:
Where is your target market? Where you end up putting down roots often depends on how accessible that location is to your target customers. For example, you might not find a ski shop in Newport, Rhode Island, a classic New England sailing town, but you can buy boat shoes and other nautical niceties on every corner. Think about who your customers are as you shop for commercial real estate.
Are there incentives to set up shop? In the interest of encouraging development in certain areas, states and the federal government sometimes offer tax breaks to businesses looking for a physical location in these areas. Check with your state government to find out more about these opportunities.
What’s the tax rate? Depending on where and how you choose to do business, you could get hammered with taxes from all angles: income, sales, property and even corporate taxes can really add up. Be sure to account for these fees in your business plan, and be on the lookout for towns that are more tax-friendly to new businesses.
What are the zoning laws? It’s important to stay up to date on the zoning regulations for any town in which you’d like to house your business since these laws dictate what can and can’t be sold or built within town limits. You’ll need to talk to the respective town or city councils to learn more about their specific regulations since they vary wildly from one town to the next.
What permits and licenses will I need? Are you selling food or alcoholic beverages? Working with flammable objects? Want to put up a sign on the sidewalk? Depending on where you choose to set up shop, you could need any number of permits per the town, state, and federal governments. Check in with the proper officials to learn more about the licenses you’ll need to do business in a specific town.
Putting your business online
Whether you decide to run your business 100% online or offer this service as a second “location,” here are some questions to answer as you build your plan:
How will you reach your market? The internet is a big place, which can mean expanded opportunities. But it can also mean difficulty finding and influencing your target audience. Be sure to have a solid marketing plan that includes targeted advertising if you plan to do your business mostly online.
What laws govern your online business? This one’s important. There are a lot of laws specific to governing aspects of e-commerce: taxes, payment methods, shipping, age restrictions, even how much inventory you’re legally allowed to keep in your home. It’s a good idea to read up on them as you build your business plan.
How will you protect your customers’ information? Online security is a huge deal, and customers want to be sure they can trust you with their credit card information and other personal details. Don’t take security for granted; reach out to an IT professional if needed to ensure your online store is safe and secure.
How will you stay connected to your team and customers? If you’re going 100% online, without a physical location for you and your future employees, it will be crucial to stay in touch with your stakeholders without physical face time. As you build your business plan, account for the costs of a cloud-based communications platform that includes messaging, video, and phone in one place, like RingCentral:
5. Understand your legal and municipal responsibilities
We’ve talked a little about this above. Be sure you’re in the know when it comes to local, state, and federal regulations for your business. Consult with the proper authorities and a lawyer to make sure you’re in compliance at every level to avoid fines or other penalties.
Depending on your state, you might also have annual requirements you have to meet in order to stay compliant. These might include submitting an annual report to the state, Articles of Amendment if any big changes are made, an initial report of your performance after opening, and more. As we’ve said above, the types of reporting you have to do will depend on where you do business, so check with local authorities.
You can learn more about specific federal and state licenses and permits that might apply to your business through the Small Business Administration.
6. Keep your plans simple and goals realistic
It’s easy to get swept up in the new ideas you have and want to make them all realities in the first quarter. But trying to do everything all at once is poison for businesses.
Your business plan is your first strategic plan, so set the tone of focused, simplified strategy within the pages of that plan. Set a small number of meaningful goals that are as attainable as they are ambitious in the first year you’re open. Make sure these goals are aligned to your mission, and decide how you will measure progress.
Speaking of measuring progress, make sure this is a cornerstone of your goal-setting process. Thanks to technology, it’s easy to set and monitor all kinds of metrics, whether it’s through your customer relationship manager (CRM), customer satisfaction surveys, or performance data from your customer service software. Analyzing this data and taking action on the results is a good way to ensure your business decisions are based on facts, not just gut feelings.
7. Center the customer
Consumers today will pay more for good customer service… and according to our research, they’ll walk away when the service is subpar:
We’re living in the Experience Economy. That’s why, once you’ve determined your target audience, it’s crucial to consider their experience with your business at every stage of their interactions.
Today, being customer service oriented is table stakes. Try shooting for “customer obsessed” instead. Find ways to delight customers however they connect with you, even after you’ve made the sale, and you’re bound to create loyal customers who happily refer their friends and family members to you.
8. Place value—and resources—in marketing
Marketing is one of those jobs that might seem easy and intuitive enough to manage on your own. But with the rise of social media, the landscape has gotten a lot more complex and important to get right. In fact, some experts say marketing is more important than ever before.
Now, with the economy on the ropes, every small business is fighting to get noticed. Be sure to include resources for marketing assistance in your plan. Even if you can only afford someone part-time at first, you’ll do well to have an expert on hand to help with brand reach and recognition in this climate.
Today, you’ll need someone who can, at the bare minimum, manage your social media accounts, write and schedule email campaigns, and handle advertising end-to-end. Many marketing professionals are jacks-of-all-trades, so you might be able to find one person who can do it all. As a bonus, it’s helpful if they can set up and analyze marketing performance reports, so you can see how well different campaigns are impacting sales.
Having an in-house design specialist is nice to have, too, since they will make sure your branding is on point. But if you can’t afford it, find a reliable freelance designer who can take on projects as needed.
If you’re strapped for cash and space, look into freelancing sites that can connect you with part-time, remote marketing help, like Fiverr and Upwork.
9. Remain flexible and ready for change
This has always been an important tenet of business, and it rings even truer today. It might be hard to predict some swings in the economy, or planet as a whole, but there are a few things you can always count on changing:
- Your audience demographics: The longer your business is around, the more you’ll need to adapt to up-and-coming generations who are interested in what you’re selling. It’s also possible that you thought your target audience was one generation, but another actually relates to it better. Stay agile and ready to readjust your messaging.
- The nature of work: Remote work was already on the rise as a trend, and COVID-19 kicked that rise into high gear. Businesses have learned that working remotely doesn’t kill productivity, and most customers have adapted quickly to the new normal, too. It’s hard to know what the next innovations in work will be, so just count on them happening and get ready to pivot.
- Technology: There are so many different types of software today that can help you automate processes and save money, and this innovation doesn’t seem to be slowing down. Keep your ear to the ground for newer, more efficient ways to do business.
- Channels of communication: Online communications are always shifting. Try to stay on top of trends and see where your customers are spending a lot of their time, so you can meet them on their favorite platforms.
- New products or services: Think about the fashion houses and companies like Hanes who pivoted to make masks when the spread of COVID-19 called for them. You might not have to make this drastic of a pivot in your small business, but keep on the pulse of what your audience needs and be ready to design demand-driven products or services for them.
10. Culture matters
If you want to attract and retain top talent today, the quality of life you offer employees is an important piece of the recruitment puzzle. As the workforce becomes more diverse and socially conscious, it’s becoming increasingly important to people that they work for a business that lets them bring their whole selves to the job.
Office culture is created, whether we put time into it or not. The choices we make in every interaction with our employees informs that culture. If you want to hire and keep the best and brightest, here are some good questions to keep in mind as you plan out your new business:
- How will you create an inclusive environment? Diversity is no longer enough; shoot for inclusion instead. Inclusion calls for more than checking a box or filling a quota. It means that people from underrepresented communities are hired, supported, included in decision making, and shown clear paths to leadership.
- How will you engage your employees? Employee engagement is how enthusiastic and invested your employees are in both their work and the mission of your business. It’s also a key indicator for things like employee satisfaction and retention. Within your unique environment, think of ways you can better engage your employees so their potential isn’t wasted.
- How will you support the psychological safety of your employees? Psychological safety is critical to people feeling comfortable speaking up and participating at work. It can be harmed by things like unconscious bias, microaggressions, and perceived disrespect from either coworkers or leadership. If you want a team that feels comfortable sharing their ideas to make your business better, make a commitment to nurturing psychological safety in your workplace.
- What does “social responsibility” look like for your business? Younger generations want to work somewhere that makes them feel proud. That’s why social responsibility is becoming more and more important for businesses. As you plan your business, think of causes that align with your own values that you can support from the beginning. If you’re a restaurant, for example, maybe you donate food and do fundraisers for the local food pantry.
Create a strong foundation with these business fundamentals
COVID-19 has sent a shockwave through the economy. No one saw it coming, and we’re still waiting to see what the overall impact will be. It might be challenging to imagine launching a new business right now.
Our biggest piece of advice to you? Plan for the worst and expect the best with the help of these classic and re-imagined business fundamentals.
There’s more in store: click here to learn about small business best practices.