How Small Businesses Can Approach a Temporary Shutdown

As nations call for behaviors that "flatten the curve" of COVID-19's spread, businesses across the nation are considering, and in some cases required, to temporarily shut their doors. 

To help you weather the rough days ahead, here are some considerations regarding temporarily closing your business.

1. Change what being open for business means.

If you're a solely customer-facing company, you may want to consider temporarily limiting the hours you're open and/or limiting your usual offerings. Let's say you own a restaurant. Instead of serving breakfast, lunch and dinner, perhaps you only stay open for dinner. 

 

In addition to limiting hours of operation, consider reducing the number of people you serve at any one time, suggests Bill Schwartz, retail and restaurant consultant at vcfo, which offers recruiting and human resources assistance to companies.

“If you’re still offering sit-down dining, consider removing some tables from your dining room to facilitate social distancing,” Schwartz says. “Additionally, many restaurants are pivoting towards takeout via drive-through and curbside pickup. This includes high-end restaurants that would never consider this in another situation.” Some restaurants in mandatory-closure areas, like NY, NJ and CT, are even using a takeout- and delivery-only approach to keep their kitchens open, albeit in a limited capacity. 

When employing temporary open strategies, keep your customers’ behavior patterns in mind.

“You know your customers’ typical buying or dining patterns, which will be critical to keep in mind in order to capture traffic at key times,” says James Jacobi, business advisor and founder of Jacobi Enterprises. “Bring awareness to your delivery service through apps and by promoting deals and discounts on social media.”

If you do reduce hours of operation or offerings, Schwartz recommends keeping a close eye on the financials.

“Whether sales will exceed variable costs—food costs and labor for restaurants—is a base determining factor,” he says. “If you’re selling so little it costs more to keep people working, it may be better to close and pay the fixed costs, such as rent. Doing this will preserve capital to help weather the COVID-19 crisis.”

2. Revise your business operations strategy.

Consider how you can limit the number of people coming in and out of your business, suggests John Gluch, a realtor and founder of real estate agency Gluch Group. His company has stopped holding open houses for the foreseeable future.

“Because of the increased concern over public well-being at larger gatherings due to COVID-19, we’re now focusing on one-on-one activities, like showing a home to a family of four,” says Gluch. “We might have fewer leads from the browsing segment of our market, but we're trying to accommodate buyers and sellers as safely as possible.”

For businesses that typically rely on an in-store experience, it could work well to take orders by phone, suggests Justin Wheeler, co-founder and CEO of nonprofit fundraising software company Funraise.

“A small business could leverage a cloud phone service provider to ramp up their ability to handle an influx of customer calls, with store staff manning the new phone lines,” he says. “Then customers can pick up orders with little to no in-person contact.”

If you run a service business requiring in-person interaction, such as a home repair company or dentist, allay customer concerns ahead of time by letting them know that all interactions will comply to CDC guidelines, and follow through by practicing appropriate hygiene measures like regular sanitizing and encouraging people to keep six feet between one another. 

3. Consider pivoting.

Depending on your business model, you may be able to shut down customer-facing operations and focus on online services. That's what Michael Volpatt, owner of the gourmet deli and marketplace Big Bottom Market, is doing.

“We’ve made the decision to close our restaurant doors until the COVID-19 virus is under control,” says Volpatt. “We are still keeping our online retail shop open. I’ll be getting packages out on time, if the government doesn’t shut down non-essential mail delivery.”

This is an ideal time to increase your e-commerce infrastructure, notes Alexander Kehoe, co-founder and operations director of Caveni, a digital marketing agency.

“Many employees can be retained on the supply side, and new jobs can be created despite the significant stoppages that are happening as a result of the current crisis,” Kehoe says. “This also opens up future options for the business as a whole and allows businesses to capture new customers.”

4. Take care of your employees.

“Small-business owners tend to understand that employees are the true lifeblood of their operations,” says Wheeler. “Therefore, it’s a good idea to think about how a major business disruption could affect them. For instance, I’d suggest announcing paid time off, so employees don’t come into work sick.”

Require that your employees stay home if they feel sick, agrees Greg DeLine, CEO of DeLine Holdings. 

“Also keep in mind that many employees are worried about their finances, so take this time to check in with them and answer any questions they may have,” DeLine advises.

Greg Ballard, CEO of boutique business consulting firm Five C Consulting, agrees.

“Your employees are wondering about the future and the impact on them and their families. Though you don’t have a definitive answer, you can communicate candidly with them regarding what you do know at this time. That builds trust.”

When possible, some companies are paying employee salaries for the near future. Volpatt is paying his retail service employees for the next two weeks.

Many employees can be retained on the supply side, and new jobs can be created despite the significant stoppages that are happening as a result of the current crisis. This also opens up future options for the business as a whole and allows businesses to capture new customers.

—Alexander Kehoe, co-founder and operations director, Caveni

Neil Shouse, a criminal defense attorney and founder of Las Vegas Defense Group, has moved to remote work and is trying not to cut hours or furlough staff and lose valuable talent.

“However, we are also drawing up contingency plans,” Shouse says. “If necessary, we would furlough our less-critical staff first with the understanding that we would rehire them once conditions improve.”

In many service businesses (including the restaurant industry), few employees can go long without pay before experiencing extreme financial distress, notes Schwartz.

When possible, have your employees work in whatever capacity you can. For instance, have the wait staff do a deep cleaning of the facility or act as delivery drivers.

“Unfortunately, we are already seeing layoffs and cuts in shifts, especially among the smaller operators, due to COVID-19,” says Schwartz. “The stronger operators are attempting to at least keep their key/high-performing employees in place. With hourly and tip-based employees, some companies are moving them to a fixed pay rate temporarily. Employers must pay at least the minimum wage, since employees will not be receiving tips.”

5. Look into relief assistance.

Your business may be eligible for local, state and federal government relief.

At the federal level, Congress and regulators are considering legislation and guidance that could open up new relief avenues for both individuals and business owners. 

“For information on relief, check official government websites, like the Small Business Association (SBA) and CDC for guidance,” says DeLine. “The federal government is working with governors on the state level, so it’s important to check what your specific state will offer. The CDC has resources for business owners, as well.”

Volpatt took advantage of a federal loan after his business was flooded during the Sonoma County California floods. “We borrowed money to help mitigate the challenges we faced after the flood, which lingered for more than a year,” he says. 

“Many local governments are already reaching out to small-business owners to give them relevant information on what resources exist to help them as the COVID-19 situation unfolds,” says Wheeler. “Depending on the jurisdiction, that can range from tax payment and filing deferments to direct help from local small-business organizations in the form of technical assistance and loan guarantees to preserve access to operating capital.”

Check with your local Chamber of Commerce and Economic Development office for relief and funding opportunities.

Additionally, your employees may qualify for government assistance, depending on where you are located. Keep abreast of these developments in order to help your employees and conserve company capital.

Read more articles on leadership.

Photo: Getty Images

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