Small businesses are the backbone of America’s economy. They make up 99.9% of all U.S. businesses, they provide job opportunities for people who may not necessarily be hired by bigger corporations, and they were responsible for 1/3 of the $1.3 trillion worth of exports in 2015. There’s no arguing that small businesses are crucial to a thriving economy.
Unfortunately, they’re also the most vulnerable in times of economic downturn. They have more credit constraints and are more impacted by weak consumer demand. In May of this year, the Washington Post reported that 100,000 small businesses closed up shop due to the pandemic. A new report suggests that one in five small businesses will have to close if the economy doesn’t improve in the next six months.
If you’re a small business owner, you must have deeply experienced the effects of COVID-19. But there are steps you can take to cut your losses. Here are some business mistakes you can’t afford to make in 2020.
Cutting back on marketing
During a recession, your first instinct may be to decrease your spending, and rightly so. But cutting down on your marketing budget is a tactical mistake you can’t afford to make. If you don’t market and promote your business, how are you going to generate sales?
The pandemic has presented a unique situation for businesses and consumers alike. People are spending more time at home, which means they are also spending more time online than ever before. Nearly half of consumers shop more online than in-store. That is a huge market and opportunity you can’t ignore. If your competitors are dropping out, now is the time to be more offensive in your marketing strategy. A study shows that businesses that maintain or improve their marketing in times of a recession experienced a boost in sales and profit compared to their competitors who chose to hold back.
Failing to adjust and adapt
In February 2020, as COVID-19 cases rose worldwide, the World Economic Forum projected that businesses that would invest in operational, strategic, and financial resilience to global risks were better positioned to respond and recover. Businesses fall when they fail to get with the times. The world of business today is entirely different from how it was five years ago, and yes, even a year ago. The world spins madly on, and so should we if we want our business to survive.
A strong online presence is crucial to your business’s success, now more than ever. There will always be a place for traditional marketing tools that still work, but for now, digital marketing and social media are your best business’s best friends and partners.
Not backing up your data
Recession or not, backing up all of your business’s data and files is crucial. Small and mid-sized enterprises (SMEs) are much more vulnerable to virus infection, hardware failure, and human error than larger corporations, who have more access to resources.
It’s understandable why most business owners think of backup recovery as an afterthought, but we shouldn’t wait until disaster strikes before we act. Just as you wouldn’t cancel your health insurance just because you’re not getting sick, you also shouldn’t neglect proper data backup to protect your business’s interests and integrity.
Slashing off prices
More often than not, the first thing businesses do during an economic downturn is discounting their prices. But while reducing your prices is necessary in some cases, it has its risks. It can devalue your products and services in the long term, making your consumers think of your product as low-quality. Research suggests that in sine consumers’ minds, a high price denotes quality. A regular low-pricing strategy may negatively impact your brand value.
Not consulting with experts or listening to facts.
Business consultants have a wealth of knowledge and experience that you may not. They may be able to see the state of your business more objectively, and they may be able to spot weaknesses that you may miss. They can guide in areas of operations, strategy, management, and marketing. You and your board of trustees still have the power to make decisions for your business, but it can’t hurt to have a fresh set of eyes look into your business’s situation.
Don’t Go Down Without a Fight
Another mistake you should avoid is lying down and taking it. If you have spent blood, sweat, and tears building up your business, you should do everything in your power to save it in times of upheaval. All businesses face resistance—this is yours. Roll up your sleeves, and don’t give up. It’s not over until it’s over.
Meta title: Business Mistakes to Note and Avoid in 2020
Meta description: 2020 has been a challenging year for the economy. Businesses must be quick to protect their interests. Here are some business mistakes to avoid amid COVID-19.