Natural State News

Small businesses have a huge impact on the American economy, but thousands are struggling or have shut down, unable to survive in the maelstrom that is 2020.

An Aug. 14 Bloomberg story said Yelp reported that 80,000 firms closed from March 1 to July 25, and most – 60,000 – were local businesses, defined as companies with fewer than five locations. It said the American Bankruptcy Institute reported that approximately 800 small companies filed for bankruptcy from mid-February when COVID-19 began to spread across the country, through July 31.

Dr. Jeff Standridge, “chief catalyst” with the Conductor, co-founder of Cadron Capital Partners, an adjunct professor at the University of Central Arkansas and an author, said it’s a dark time for small firms.

“Businesses are struggling. The average small business has 27 days of cash on-hand,” he told Natural State News. “Once the crisis hit, those businesses simple could not keep their doors open. As a result, it’s been estimated that almost 200,000 business have shut their doors, over half of which are permanent closures.”

Standridge said the responses have been varied.

“Some are hunkering down, conserving capital and/or closing their doors,” he said. “The most aggressive, those with healthy balance sheets and strong cash balances, are using it as an opportunity to grow.”

Standridge offered four recommendations to combat this crisis:

Focus on the fundamentals: clients, revenue, expenses, cash and people.

Look for opportunities to gain new ground. This could come in the form of organic growth, or growth by acquiring weaker competitors.

Innovation. Identify the three or four "game-changers" in your industry, market and/or business and pursue them relentlessly.

Revisit your strategic growth plan. The fact is, most strategic plans have been rendered virtually useless by the current economic crisis. Strong companies are revising those plans in the current context and using them as leverage points to gain new ground.

Standridge also offered “a stream of observation” on current challenges and opportunities.

“Within 15 minutes, I had two very different Zoom calls with business leaders,” he told Natural State News. “I just got off the phone with the leader of a medium-sized tech company and he was highly frustrated because his leadership team was ‘hunkered down,’ and not focused on doing the things that would enable them to grow,” Standridge said. “Not only that, he told me that he had to completely toss his company’s strategic growth plan because it was so far from reality now that it wasn’t even usable.

“By the same token, I’m working with another business leader of a similar-sized company, and we’ve found literally millions of dollars of opportunity locked inside his business and we’re currently working together to extract those profits right now,” he said. “Two similar businesses, but two very different stories and drastically different results. I can replicate those two stories across dozens of companies.”

Standridge said this is a crucial time for many businesses as their leaders are often unsure what step to take next.

“Recent study indicated that almost 60% of business closures as a result of the pandemic are now permanent,” he said. “In fact, almost 165,000 businesses have closed since March 1, 2020. Further, about half of all business owners and executives are not expecting business conditions to drastically improve in the coming year.

“The problem is that most strategic growth plans have been rendered virtually useless due to the impact of COVID and the resulting economic climate,” Standridge said. “As a result, many leaders and their organizations are pulling back, hunkering down, and hoping the storm will soon pass. If they knew what actions would produce the greatest return, they’d step forward. But they simply can’t waste time, effort or money making the wrong decisions.”