Braving these uncertain times: small businesses and Covid19 / Coronavirus

Written for: small business owners and freelancers in India, in the context of the fallout of the Covid19/Coronavirus shutdowns.

Where we are today, the 8th of April 2020

It’s been four months since the first reported cases of Covid19 emerged from Wuhan, and the world as we speak is facing a situation even World Wars haven’t brought along: mass quarantines and lock-downs. International air travel seems to be shut for the foreseeable future as countries hunker down within their borders, hoping to prevent new cases imported from abroad. States have shut their borders too, hoping to prevent new cases imported from neighbouring states.

Local and central government lock-down rules have meant that if your business doesn’t feature in the “essential services” list, you’re pretty much shut down for the next few months: even if the state you’re in hasn’t been hit hard, all lock-downs will be lifted only in phases, with only some services allowed at first, expanding to some %age attendance allowed in private companies and much later, a full reopening of all services.

Don’t expect trade to just pick up where it left off

And then there’s the issue of confidence: not of the government, but of the average consumer. These mass shutdowns are going to impact employees and employers alike: zero sales is never good news, and employees at major companies will see pay cuts and even layoffs. Some bad news is coming, and it just hasn’t hit the average employee yet. That average employee is most likely your customer, and her fate will impact yours. How will she react to spending later this year? For every 100 rupees she spent in the days before the lock down, how much will she be willing to spend once the lock-downs lift and she takes stock of her finances?

Don’t expect the world to behave the same way

If you’re running a service business, say a restaurant, there’s two possible extreme scenarios in the days following the lifting of lock-downs and easing of restrictions:

1. You might see a huge rush of customers who are craving their favourite dish served at their favourite restaurant

2. You might not see even 50% of the crowd come back in because of the fear of congregating with people inside a closed area

Mr. Modi referred to sweeping changes he sees in the way we run our lives: literally, a pre-corona era and a post-corona era. Will the post-corona era give us social distancing as a norm in most areas of our lives? Will middle seats go empty in airplanes, will Udupi restaurants change their seating to allow for six feet distance between customers, will supermarkets forever require masks and the use of sanitizers as we enter, will spaced queues actually work in India, will wedding guest-counts shrink, will we ever shake people’s hands again?

Time will tell, you’d say. But we already can see some of these behavioural changes playing out in our streets and colonies. There is an all-pervasive (in many cases, very ill-informed) fear, and everyone from the cops to colony watchmen to shopkeepers and fellow patrons at stores are playing the role of enforcers, enforcers of a change in behaviour that’s both new and here to stay. If the projections for how ghastly this could get come to pass, even when the lock-downs go (short of an antibody test and global vaccination execution), our behaviour in certain areas of life will have changed permanently.

Without trying to predict how this changed world will look (see this, for some wild predictions), I’ll move on to talking of what we ought to do in the short and medium term.

Paranoia now beats panic later. It’s ok to be seen to be foolish now.

Only the paranoid survive, it is said. What you read here is written for the worst case scenario: markets freeze up for months on end, everybody saves the money they have left and cut down on spends for longer than we expect, people don’t gather together in large groups for any reason for two full seasons or more, travel gets hit massively and so on. Let’s say none of this comes to pass, and this post is seen to be foolish and fearful in retrospect: I’m ok with that, and so should you be.

With these lock-downs extending for a month or more, and with the biggest cities in India hit the hardest, please do not expect the weddings space to go back to normal immediately. Why I say this: government confidence in large gatherings of people for any purpose is going to be low. An expert committee in Kerala has written out a detailed recommendation to their government for a phased lifting of lock-downs, and what’s startling is the specific call out to weddings: read it here (TLDR: heavily impacted districts should restrict weddings to 10 guests, less affected districts to 25 guests). Yes, the average Indian isn’t as worried about this as the government is, so some people will want to congregate in numbers when it’s allowed. But only some. Expect a damp year.

For some related reading, here’s a very dire Money Control article dated today, on the effect of the pandemic on wedding entrepreneurs in India, and how it might have a long-term impact on the size and scale of weddings in India.

It’s not about whether this will ever end. It’s about when.

Life will settle into a new normal at some point in the future (that restaurant in our example above is sure to open at some point), but the real question is when: when do customers move about freely enough for business to come back to normal. That’s the question that’s key to you, you the business-owner, you the freelancer. Your savings and/or your buffer in your current account can only help you survive for a certain amount of time, and your only job at this time should be to try to prolong it as much as possible. The difference between your next advance from your next assignment coming in 3 months from now versus 6 months from now is huge.

Small businesses and freelancers: tighten your ships now.

1. Count your money. Make a clear table of every rupee in every bank account (personal and corporate), and every rupee owed to you in #2 and #3 below, and focus on that number.

2. Collect your money. Go over everything and find out every rupee owed to you from older clients. And collect it. Every 10% left at a client’s end is real money, and if you have to make amends and open conversations you’ve assumed are closed, now is the time.

3. Go over your payment terms. For clients where payment is linked to delivery, push hard and finish deliveries and collect money now. Expect delays/deferment from clients because of the shutdown. The time to collect is in April, not May.

4. Figure out how much you owe your vendors. If you have payments pending, make a note of this. If you have deliverables pending, and you will incur costs on this, make a note.

5. Evaluate every rupee you’re spending and question it. Question all software subscriptions, vanity purchases, even your rent. If you can live without it, you shouldn’t be spending it.

6. If lock-downs don’t open completely in a month’s time, salaries and rents are going to be an issue. Please make your plans for that now: what will you defer, what will you delay, what will you reduce. For things like salaries and rents, a conversation with your team and your landlords is in order. Right now, not when you have to break unfortunate news to them.

7. Cross-sell to your existing customers. Are there services/products you can offer to your existing customer base? And can these be executed with minimal/remote client interaction?

What to do with your time now

If you have time on your hands now (kidding; of course you have time on your hands!), consider how you’re spending your time. This is not a holiday, this is a break from work. Even if the kind of work we were used to doesn’t exist in a post-corona world, we will still have to work. To that end, how you spend your time now can help you build a better future:

• Get your business data in order. If you don’t know how to, ask me. Most businesses keep terrible records, and this time on our hands is a God-send to help us and our teams fix this. Also, when is the last time you fixed your website, or worked on a plan for your Instagram account? If not now, then when? :)

• Learn how to use business tools. From Excel to Word to everything else, most business owners’ proficiency in business tools is very middling. You could fix this now.

• Focus on your strengths and get stronger there: if you love something, now’s a great time to learn more and get better at it. A better product is the only shortcut to a better everything, whether it’s sales or customer satisfaction. Learn how to improve the products and services you sell.

• Work on your weaknesses and get started on at least learning the basics.

• Consider adding services to your business that cater to new sets of customers.

Finally, imagine an alternate future for yourself. If the world as we knew it were to end tomorrow and you couldn’t sell the things you’ve been selling all these years, what could you do? What can you make and sell? What can you offer the world? What can you learn today that you can monetise tomorrow? You may never have to answer this question: in all likelihood, we will come back to some form of normalcy at an uncertain point in the future. But if you did have to answer it, wouldn’t it be better if you had some answers?

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If you’d like to talk to me, find me on Instagram. My DMs are open. Please share this note with any entrepreneurs and freelancers who will benefit from it.