With the resurgence of the coronavirus as the Delta variant, small business owners are once again faced with unknowns about the future. One thing is for certain, the current pace of the pandemic recovery varies by industry, and small business owners will continue to focus on juggling multiple outcomes — whether they’ve experienced hardship or been on solid footing.
In the Oregon economy, some segments including many technology businesses weathered the last year and half better than expected. Others, like transportation and travel, experienced dips, but now have the opportunity to shift towards profitability. Others still, including manufacturing, equipment dealers, and food distribution sectors remain bogged down by labor and supply shortages, struggling to meet demand.
In short, according to executives we’ve spoken with in Oregon and Southwest Washington, our business recovery is uneven and will continue to be so. However, the unavoidable changes to the way small businesses operate now are relatively consistent. Despite ongoing challenges, there are steps small businesses can take to better position themselves for the remainder of 2021 and beyond.
TAKE ADVANTAGE OF LIQUIDITY
Lots of liquidity remains in the system. Businesses we work with that held back on large purchases and expansion are flush with capital. Interest rates remain relatively low, making vital cash needed for recovery affordable. Banks, like Wells Fargo, are open for business and ready to lend to those who qualify. This creates an optimal environment for mergers, acquisitions, and divestitures. To take advantage, companies and businesses should consider ways to create more options, giving them more flexibility to grow. For instance, is it a good time to purchase a competitor? Would expanding into additional markets or introducing new product categories right now make sense? Broadening your scope of thinking could lead to surprising opportunities for growth.
GET CREATIVE WITH JOB INCENTIVES
A record 4 million people quit their jobs in April alone, according to the U.S. Labor Department. In speaking with local companies, business leaders tell us that some once-strong company cultures have dissipated due to distance, and a sense of disconnection grew during the pandemic. Young employees became free agents lured by recruiters. And tenured employees, grateful for the job security in the time of crisis, are now bolting for the exits. Leaving is easier to do when connections to coworkers and day-to-day company culture have frayed. The spike in turnover has unsettled the best of companies, with many struggling to fill positions. The number of job openings reached a series high of 9.3 million on the last business day of April, the U.S. Bureau of Labor Statistics recently reported.
Businesses must think outside of the box to coax new workers and convince long-term employees to stay. Cush benefits, such as unlimited vacation and bringing pets to work, previously a rarity in the workplace, are now expected. To become a “destination” company today, business leaders are finding ways to improve employees’ quality of life through tangible incentives and inject more fun and flexibility into the workday.
DIVERSIFY SUPPLY SOURCES
During the height of the pandemic, it made sense to keep inventory levels low. As demand swings back, businesses tell us they are having trouble sourcing the product, supplies and parts to fulfill demand. The days of depending on a single supplier for necessary components are over. Businesses that want to avoid similar challenges in the future are lining up multiple sources to meet their ongoing and future needs. Some are even purchasing the domestic suppliers they depend on or switching to multiple local suppliers to avoid leaning heavily on overseas imports in the future.
PLAN FOR SUCCESSION
Building a solid succession plan is key to preserving your legacy, culture and future of your business. Talent and succession planning should be at the forefront of your vision for future viability and growth, especially if your business is family owned. What happens when the current leader or key executives retire? Do you know the dreams and goals of your top talent? Could incorporating professional development and training help
ensure a deep bench of future leaders to carry your vision forward? If you have not considered these questions before, there is no better time than now.
USE TECHNOLOGY TO ENHANCE SECURITY
Now is also the opportune time for a cash-management technology checkup. Cybersecurity concerns plague every company across every industry, no matter the size. Protecting company and customer financial data should rank among your top priorities. Talk to your banker about the latest and greatest financial cyber security measures, including ways that enhancing your current financial systems can help keep data more secure. Digitizing back office payments and receivable systems can also affect the bottom line. Many treasury management tools not only help improve cash flows by getting receivables sooner, they can help you make and keep more money.
COVID-19 continues to challenge our Oregon and Southwest Washington communities and businesses. The steps to rebuild and prepare for the future depend on reimagining the workplace and operations of the past, along with aggressively planning for the future.
Michelle Weisenbach is Wells Fargo Oregon and Southwest Washington Commercial Banking Leader. She can be reached at Michelle.Weisenbach@wellsfargo.com or 971-978-4771.
Opinions and information included in this article are general and not intended to provide specific advice or recommendations for any individual or entity. Contact your banker, attorney, accountant, and/or tax advisor with regard to your individual situation. The author’s opinions do not necessarily reflect those of Wells Fargo Commercial Banking or any other Wells Fargo business.