At a time when small businesses are struggling, this interview conducted by the website The Motley Fool with Shark Tank's Daymond John has advice that can be very helpful to small business owners. The Rules of Thumb blog from MoneyThumb has posted the Motley Fool article and interview below:
It's not exactly smooth sailing on the small business front right now. While some local establishments have made it through the COVID-19 crisis with minimal damage thus far, a great number are struggling. And while there's been assistance available-think PPP loans and the like -- many agree that's fallen dangerously short, to the point where some businesses that were shut down in April and May risk never managing to open their doors again.
But these days, more and more businesses are opening their doors, and it's a pivotal time for smaller operations in particular who need to not only offer exceptional value to customers but also take steps to ensure their safety. As such, it pays to take advice from someone who's seen his share of adversity and has overcome it consistently to establish not just a successful empire, but emerge as one of the most influential voices on the entrepreneurial scene.
We're talking about none other than Shark Tank's Daymond John, and in an exclusive Motley Fool interview, John was kind enough to share some words of wisdom for small business owners who are grappling with all sorts of challenges right now. Here are some important takeaways from that conversation.
1. Open with caution
Many small business owners are clamoring to reopen right now, but John warns to do so cautiously -- not just from a safety standpoint, but a financial one, too. "Prepare for a slow open," he advises, citing the fact that not all Americans are financially equipped to patronize businesses like they once did, and that many people are still fearful to go out in public. That means business owners shouldn't rush to purchase inventory or increase staff until they see what sort of foot traffic they're benefiting from.
At the same time, John cautions small business owner not to grow too complacent, and to prepare for a second wave of the pandemic to hit. That could mean gearing up to pivot to online commerce, or taking other steps to thrive in the face of tighter restrictions.
"Don't act like this thing is over," warns John. It's too soon to tell if and when a possible second surge of COVID-19 cases will hit, but we can't assume we won't face another massive lockdown like most of the country was under for April and May.
2. Be honest with employees
These are economically fragile times for everyone, and John thinks it's wise for small business owners to be open with their staff and customers about where they stand financially. "Traditionally, business owners would not share financial details with employees, but there's a shift now," he explains. "Be honest with the people around you, and be prepared to listen."
John also encourages small businesses to extend as much goodwill to customers as they can right now. Being flexible with a patron who can't pay immediately is an act of compassion that could go a long way.
3. Think about ways to drum up business creatively
It takes a certain attitude to survive a crisis, and John feels that those who are able to dig in and find innovative solutions for their businesses are the ones most likely to thrive as the country reopens. Specifically, John advises small business owners to think about who in the community they can team up or collaborate with. For example, he explains, a local gym that's first reopening can partner up with a local juice bar or apparel store, offering existing and new customers discounts at those establishments. The juice bar and apparel store could, in turn, promote that gym and give out a new member coupon. This is just one example, but John feels strongly that a time like this, it pays to look to other businesses as allies.
4. Know when to throw in the towel
The unfortunate reality is that a lot of businesses will end up closing their doors permanently due to the economic crisis spurred by COVID-19. John advises newer businesses, in particular, to proceed with caution when borrowing money.
"Ideally, [COVID-19] will be under control in a year," says John, "so ask yourself -- can you reduce enough costs and bring in enough to make it through a year?"
While John agrees that selling assets and raising funds are both reasonable steps to take to survive the next 12 months, he also cautions against getting in too deep. "If you had a thriving business before this, maybe you push," says John, "but if you're a newer business, at some point, you do need to stop the bleeding."
5. Don't be afraid to start a business
You'd think that now would be a terrible time to get a business off the ground, but John doesn't feel that way. The right concept, he argues, could really be successful if it caters to people's needs during a period of uncertainty.
"This is a great time to start a business," John insists. "You're going to be more creative; you're going to hack yourself. You're starting a business with the mindset people have now." John points out that a lot of successful companies emerged from the Great Recession because they had ideas that were relevant at the time, and that catered to a specific need.
6. Be mindful of your own mental health
Small business owners carry a lot of weight on their shoulders. During normal periods, it can get to be a burden, and during a pandemic, even more so. That's why John is a huge proponent of small business owners keeping tabs on their own mental health, and seeking help as needed.
"You don't have a business if you're not mentally OK," John insists. As such, he encourages business owners to talk to professionals, colleagues, and other people who can listen without judging.
Right now is a tough time to own a small business. Anyone who's struggling should take Daymond John's advice to heart -- and seek additional advice from mentors and other professionals who may be able to offer similarly invaluable insight.