Think now about making your Utah business strong during a recession
It’s a stark statistic — about 25 percent of small businesses in America are in danger of closing due to the coronavirus response. That is about 7.5 million. The number reported by the Small Business Administration came from a survey conducted by Main Street America between March 25 and April 6.
Although it is a daunting number for business owners to face, there is hope. Businesses that position themselves well can not only survive, but also maintain past progress — and perhaps even profit as never before — even in today’s ever-changing business climate.
First Utah Bank knows it is a stressful time for every business, but small business owners face even more obstacles. A recent article in Utah Business magazine written by Brad Bonham, the co-founder and CEO of Walker Edison Furniture Co., outlines some of the steps any Utah business can take in order to weather this latest economic storm.
Coming up with ideas to cope
Bonham is the leader of the 15th fastest growing business in Utah, as named by Utah Business, and also teaches about start-up businesses at colleges. He writes that constant preparation before the COVID-19 struggles helped Walker Edison thrive instead of falter during the crisis. Still, he understands some of the steps other businesses have taken to stay afloat.
“Maybe you’ve had to let people go in order to right-size the P&L,” he writes. “Many business owners have had to tap emergency reserves or pull down their lines of credit entirely. None of these are easy decisions.”
In his article, Bonham talked about three steps a business can start right away to make sure these current times are more prosperous and that a future downturn or recession isn’t as big of a burden.
1. It’s important to look around at the purchase patterns and need-based appeal of your services going on at any one time. If you run a retail store, think about digital strategy and how that can be improved. If you offer services, consider ways to make your product a must-have in good or bad times.
“Being nimble, thinking outside the box, and garnering goodwill with your existing customer base just might be the thing that carries you forward,” Bonham writes.
He shared the example of a personal training business in Utah that closed its public office but moved to offering online sessions in order to keep its entire customer base. “The desire to work out didn’t go away,” Bonham said, “but he needed to pivot in order to continue providing that service to his customers.”
2. No matter the economic climate, there is always the matter of having the right type of employees surround you. During economic downturns, it’s even more critical. Bonham writes that the time is key since there are more unemployed people in Utah than at any other time in recent history, with joblessness expected to crest between 10-15%.
“Lots of hard-working and smart people have found themselves looking for a job, and they are motivated,” Bonham notes. “Job postings that would historically garner 10 to 20 resumes are now getting hundreds of applicants. Take advantage of this moment to build out the team that will help you exit this downturn and position your business for success in the future.”
3. Get on the road to financial stability now. It may have been a hard lesson to learn, but Bonham notes that many businesses didn’t have a plan in place from the previous economic downturn in the late ‘00s. Having a plan now to bring in more profits and to know the precise point to seek out more funding is something to always remember and adjust as the times change.
“Ask yourself: what’s your burn rate?” Bonham said. “How much do we need in financial reserves to carry our business if the economy shuts down again? What type of debt/equity financing or line of credit makes sense for our business so that we can keep the lights on if revenue is severely impacted in the future?”
Bonham suggests creating a profit-loss plan that clearly shows what would happen if profits lessen and how you can adjust quickly to it.
Online banking makes things convenient for Utah businesses
One potential technique for making sure there is smoother sailing in business after the coronavirus protections are lifted, whether there is a full recession or not, is to have secure, online banking. First Utah Bank has options for any size business that bring convenience to this important step in your success.
First Utah Bank’s website for Internet Banking starts with an easy-to-use log-in with a greater streamlined process from before that still offers the highest levels of security for your data. If you are part of the bank’s Treasury Management program, you also can use the online portal for 24/7 access to all of our services.
Whether you need to check the financial status of an account from your phone app or you want to make a remote deposit, First Utah Bank’s remote access turns it into a simple process. To learn more about what we have to offer, go to our website or call First Utah Bank at 801-308-2265.