How to prepare for the new normal or abnormal ahead?
SMBEx is a community to support the small businesses to provide them with a community of demand and supply to build an online market. It is a tool to provide a global reach for new customers for small businesses. SMBEx also helps enhance the technology and processing for small businesses. Moreover, SMBEx help build a strong community support for local businesses to maintain high standards and deliver maximum social impact. In a post-COVID era small business can’t just be surviving but need to thrive in order to be sustainable in the new abnormal. Small businesses need to play both defense and offense simultaneously to make an impact in local communities.
COVID has brought a lot of disruption to the economic status quo. Generally, we talk about the new normal when business or societies go through a period of change. Mostly change happens through a crisis situation. Change can also be triggered intentionally without a crisis. However, it is less likely that people change unless they have to because the default state of humans is status quo.
Change is good in many instances. Change requires action and effort. Crisis can be beneficial to change. The change that crisis brings depends on the actions and reactions that decision-makers take while surfing through rough economic environments.
The risk factor is one of the keys that triggers small and big businesses to move in the direction of change. The abnormal is shaped when the economic conditions in the normal business environment is challenged. If the economic conditions continue to be challenged the businesses go from a state of risk to a state of uncertainty. In the case of COVID the past several months of handling risk was mostly through stimulus money and in some cases unemployment checks. In the long run, these mechanisms jsut buys time and are not sustainable. They held businesses in the “bunker” until the plague passes. The recent conflicting reports of a first wave to a second wave of the virus warns that businesses would need even longer time to fully recover. By repeating the same solution of injecting a second wave of stimulus is not a good idea long-term for the economy but rather harmful. All stimulus does is hoping to buy time to keep the economy afloat. There are bigger issues and problems for the economy that the central banks and governments should not hesitate to address. Bail out money creates more national debt for the economy as a whole which is not a healthy practice.
While communicating with a few lending and small businesses the general vibe is the uncertainty that business and lenders are facing in the current market conditions. A period of managing COVID risk for business has entered into a wave of uncertainty. Furthermore, if businesses find hard time coming out of the state of uncertainty they move to a next wave that nobody wants to be in. It is a state of loss of control, the way out for most businesses is to file for bankruptcy. Many businesses have already filed or in the process of filing for bankruptcy.
If the 2008 financial crisis saw bankruptcy and foreclosure of the real estate market and related companies, the COVID economic crisis does not have a specific sector of business it targets since it is a health crisis. It pretty much affects all types of business. It can apply across all sectors of businesses as most supply chains are disrupted. This can lead to a greater crisis than the one of 2008.
Bailing out seems to be the mantra of the Fed Reserve and central banks to jump start the economy. This is the same playbook they used during the 2008 crisis. During the COVID crisis government and bankers are not sure if the playbook is not going to be any different. They have only renamed the programs that essentially do the same thing.
Usually during an economic crisis the companies that fold mostly are in the small and medium sector. Because small companies don’t have much room to maneuver during unstable times. In some cases they are forced to consolidate and merge with larger players in the sector. If such rescue plans doesn’t work companies file for bankruptcy. The big companies tend to be the rescuers and helpers during economic crises for smaller companies. In either case, the brunt is borne by small businesses. Generally speaking, the small businesses find it hard to become sustainable. For instance, during the last financial crisis the smaller community banks either consolidated with larger banks or were liquidated. As a result, small businesses were considerably reduced.