The COVID-19 recession was different than any business owner had experienced in more than a hundred years. This was not caused by a banking crisis, a slowdown in economic activity or a stock market bubble. This recession was created by a deadly virus that spread quickly throughout the world, forcing governments to shut down businesses and instruct their citizens to quarantine at home.
For many small businesses, the impact has been devastating. According to the most recent Census.gov Small Business Pulse Survey, 43.6% of small business owners report the Coronavirus has had a “moderate negative effect” on business, while 28.2% report a “large negative effect.”1
How does this translate in day-to-day business? Main Street America reports that out of its 2,049 small business participants, 53% closed at some point throughout the pandemic.2 And those still standing continue to face hurdles. In a study commissioned by Small Business Majority, 60% of small business owners reported that they had not restored their headcount to pre-pandemic levels, particularly for female-owned businesses.3
While the data may be dismal, there are some small businesses that managed to survive. In fact, some have even thrived by innovating, pivoting and adapting to their new circumstances. Here, The Hartford interviews three business owners who showcased key survival tactics for small business through 2020 and into today.
Strategy No. 1: Pivot to Digital and Double Down Online
Terra Running Company, owned and operated by Brittany Katz, is a specialty running store. Located in Cleveland, Tennessee, they pride themselves on customer service. “We help customers find solutions to keep people active, including helping customers find the right shoes for their foot shape and meeting other needs using our custom fit process,” Katz said.
The company also offers private, semi-private and group running programs. In addition to that, they have several free informational sessions and educational classes each month. They’ve built relationships with more than 30 local and nonprofit organizations each year to help professionally provide chip-timing for different running and cycling races.
At the beginning of 2020, Katz’s business was like many other small businesses. They had to find new ways to connect with and serve the community, building their client base and coming off of another bustling holiday season a couple of months prior. All was good and 2020 looked to be another promising year. And then, COVID hit.
Large gatherings started to be cancelled all over the country and Katz was frantic. She had to abandon three races that were to be held in March, without any indication of when they would be able to reschedule. Shortly after, statewide mandates required that non-essential businesses had to close, and that included her company. Katz, like many other business owners at the time, found herself in a terrifying place.
“I quickly pivoted and heavily invested in our online presence,” she said. With no end in sight, she knew that shifting to online alone may not be enough to survive, but it was certainly a critical part of her company’s future.
In the Small Business Shopping Study conducted by The Hartford, 43% said that they had to change their interactions with customers and clients. Katz was no different. “One of our primary focuses was remaining adaptable and willing to go where the business was,” she said. “We used that online expansion to keep our customers engaged with the long-term hope that they would return to our store once the situation improved.” Part of her survival strategy became focusing on her company’s coaching services that could be offered virtually. And it worked. Katz’s customers have remained loyal throughout the pandemic.
Like many small businesses, she also had some financial help. Terra Running Company relied on grants and forgivable loans from their local Chamber of Commerce, as well as a grant from Main Street America and The Hartford. “Receiving the HartBeat of Main Street Grant came with a huge sigh of relief,” she said. Katz has been using these funds to keep her current employees, as well as to assist in paying for virtual business expenses. “I am especially thankful for organizations such as The Hartford and Main Street America who are doing the actual work to help keep vital small businesses strong during these unprecedented seasons.”
Katz’s company is part of a trend of businesses moving to ecommerce, virtual offerings and online sales.4 It is an on-going trend that pre-dates COVID, but was significantly accelerated by the pandemic. Because she embraced that change – and the power of the internet – her business not only did well in 2020, but is well-positioned for success in the future.
“COVID has taught me how quickly outside circumstances can change,” she said. “It also reminded me how thankful I am to get to do what I love.”
Strategy No. 2: Expand Your Product Line to Meet Consumer Demand
Regardless of their specialty, entrepreneurs tend to have several commonalities: they’re scrappy, creative and agile. Anita Comisky is no different.
Comisky started Amelia Toffee Company, a candy shop based in Fernandina Beach, Florida, in 2016 using her grandmother’s recipe. Her goal? “To create a small business that gave me a creative outlet, employed women and caused our customers to smile!”
Comisky found success by being the only toffee maker who uses unique ingredients such as lavender or licorice in their toffee, while also employing women who are in search of a second chance. However, when the pandemic hit hard in March 2020, Comisky, like all other businesses, was blindsided. “We never thought half of our wholesale customers would disappear in a flash,” she shared. When that happened, Comisky and her team had some important decisions to make.
Similar to Terra Running Company, the first thing Comisky did was improve the company’s website so it was more consumer-friendly. This resulted in boosted sales while keeping customers engaged with flash sales, product updates and more. “We did not have this feature prior to COVID,” she explained. “So, our focus changed to direct-to-consumer [from] grocery stores since so many consumers were shopping from home. This was a very worthwhile project.”
Unfortunately, leaning in to direct online sales wasn’t quite enough. Comisky needed more to keep Amelia Toffee Company going. In an unlikely, yet brilliant move, the company capitalized on its access to medical-grade alcohol and developed a cleaning solution using it. “The sales from this kept our business afloat as we developed a strategy for the next several months,” Comisky said.
The changes in distribution and enhanced product offerings resulted in an 11% sales increase during 2020, as well as a thriving new relationship with the Home Shopping Network thanks to an open application process. When reflecting on her ability to navigate the pandemic, Comisky credits several things. “Appearing on HSN, leveraging social media, attracting corporate clients for holiday gifts…it all comes down to watching every cent and managing cash,” she said. “It is scary not knowing what the economic conditions are and might be, but if you focus on gaining one customer at a time, it takes some of the uneasiness away.”
Strategy No. 3: Add Distribution To Boost Revenue Opportunities
Josh Flanders, Benjie Gijnes and Bill Larson enjoyed brewing their own beer at home for years. After the trio decided to team up in 2016 and showcase their product at a local beer festival, they quickly gained fans, secured funding, purchased a location and launched Buzz Bomb Brewing Company. For the next 14 months, the three partners spent time remodeling and renovating their newly purchased building in downtown Springfield, Illinois. They transformed it into a production microbrewery, along with a two-story taproom, making it a perfect venue for trivia nights, comedy, live music and much more.
Everything had fallen into place. And then 2020 came.
For Buzz Bomb Brewing Company, the pandemic hit especially hard. “The bulk of our income has and continues to come through our taproom in downtown Springfield. Being both a bar and a music venue, we’re in two of the hardest hit industries,” Flanders shared.
In response to the pandemic, Buzz Bomb Brewing Company had to operate with reduced capacity and many new challenges. These challenges consisted of additional costs for more cleaning supplies, the labor to clean and manage the process, outdoor seating, tents and heating. Despite the situation, Flanders still feels lucky. “We weathered the storm better than many due to leveraging outdoor seating and providing entertainment safely,” he said.
After adding delivery and carryout, services they didn’t offer prior to the pandemic, Flanders also looked toward expansion. “The biggest pivot has been our expansion into distribution, facilitated by the HartBeat of Main Street Grant Program.” With the help of the grant, the partners invested in a new canning machine to help increase their ability to distribute to additional markets.
Flanders one regret was not moving into distribution earlier in the pandemic. “We didn’t think the pandemic would last as long as it did at first,” he said.
While expansion into distribution and maximizing outdoor seating proved to be wise business decisions, Flanders said the company’s local community has been the bedrock for the business. “The support of the community and our customers was amazing. We knew we had plenty of loyal customers, but we didn’t realize how much they would turn out to support small businesses.”
With small businesses generating 44% of U.S. economic activity (according to the U.S. Small Business Administration), Flanders taps into a fundamental truth: We need small businesses to stay alive in order to maintain a healthy economic ecosystem. Every product ordered, takeout dinner eaten and gift given can help.5
2 The Impact of COVID-19 on Small Businesses: Findings from Main Street America’s Small Business Survey, May 2020
3 Small Business Majority, Scientific Opinion Poll: Small Businesses Continue to Face Closures, January 2021