In the US, 60% of small businesses shut down because of the pandemic and will remain permanently closed. The picture is similar in London, with more than 76,300 small and medium-sized businesses having to shut for good. The void that they leave behind is very quickly being filled by big business: Amazon tripled its profits between 2019 and 2020, while major UK supermarkets saw sales rising by 43% in the early stages of the lockdown.
To say the pandemic has been a tough time for most small businesses is an understatement. Multiple pivots, difficult staffing decisions and financial hardship have underscored even more the sheer challenge of running a small business. Big business is still successfully meeting the consumer demand that these small businesses can no longer satisfy, but it’s important not just to look at it from this angle – that ignores the vitality and diversity that small businesses bring to not only local communities, but to the global marketplace.
These enterprises, however small they might be, are the lifeblood of local economies. They keep capital flowing in local neighbourhoods, reinvesting it back into growth, jobs and further business opportunities. Small businesses compel corporations and governments to innovate, by challenging the status quo and consistently adapting to the circumstances.
More needs to be done to keep these businesses afloat, both from the top-down and from the bottom-up. And how can small businesses themselves learn from one another to be able to better withstand a crisis in the future?
Focus on community initiatives
For London-based corporate catering company Karma Cans, lockdown was a blow. But it got through it by turning its focus to communities. ‘After seven years of trading, we were on track for our best year yet,’ explained co-founder Eccie Newton. ‘But overnight, we got to only receiving 1% of our normal orders. How could we continue to pay everybody like that?’ On top of financial challenges, the Karma Cans team had a Covid-19 outbreak in their kitchen, shutting the whole operation down for three weeks.
‘We were on Deliveroo and Uber Eats immediately, but it was so not us – we wanted to be closer to the community, not further away from it,’ says Eccie. ‘So we pulled away from the delivery operation and got a contract with the NHS instead, serving healthcare workers.’ Although the NHS contract ended a couple of months ago, Eccie and Gini are keen to continue a direct-to-consumer approach, with the same essence of community that they brought to corporate catering. ‘We’re planning a secret window set-up in Borough Market in London, where people working from home can come and pick up their lunch from a daily changing menu.’
Pivoting from being a supplier to a retailer requires a whole new set of skills, especially in the already crowded marketplace of food service. ‘We didn’t even have a marketing team – we had a sales team who contacted office managers and set up contracts,’ Eccie says. ‘Hundreds of businesses have used us across London, but they don’t necessarily know who we are.’
Pivot your strategy
Sweetshop Media was looking to raise a round of funding just as the initial lockdown landed. For founder and CEO Angus Imlach, who had bootstrapped the company from the very beginning, the sudden shutdown of funding options signalled an opportunity. ‘On one day, we had four calls in a row from clients looking to pause work. But we also had two clients who doubled down, and we did our best to help them with their goals.’
With the funding plan pushed aside, Angus hired seven people onto the Sweetshop team to focus on high-quality output. ‘We took on work at a discounted rate to build our portfolio, and we’re still looking at the books every day without fail. We want to make sure we’re not biting off more than we can chew.’ With the economy readjusting, and clients trickling back in, the media company has been able to refocus on the raise. This time, it wants to put the money towards a specialist product portfolio in which it upskilled earlier in the year.
Strengthen your online presence
For the Three Mills Bakery in Canberra, Australia, the lockdown meant a complete switch-up of its business model. Having previously relied on wholesale distribution to local cafes, the first week of lockdown saw the bakery experience a 78% drop in sales. The remaining revenue trickling in could only cover another week of wages. ‘There was no time to strategise about launching [online] during Covid-19. It was purely about survival,’ says director Jarrod Deaton.
In 48 hours, the team spun up a simple, bare-bones online shop with a limited product range. ‘Looking back, deploying any strategy at speed was the main contributing factor to success,’ says Jarrod. ‘It certainly wasn’t our best-looking work. It was laborious to manage orders and there were loads of mistakes.’ Alongside its new online shop, the Three Mills team doubled down on digital communication, using social media for quick engagement, and SMS, email and phone calls to fulfil orders.
Create a new brand experience
‘I’ll never forget 23 March,’ says Bami Kuteyi, the founder of London dance studio Twerk After Work. ‘The community centre I was teaching in had just shut, without warning. My clients and I were stuck outside.’ After bringing in hundreds in revenue per day, Bami saw the revenue in the business bank account drop to zero.
Bami and her team immediately moved the dance classes to Zoom, which brought in a significant number of referrals – from a couple of hundred bookings per month, she was seeing close to 2,000 bookings per month at the peak of the lockdown. ‘Our demographic started to shift,’ Bami explains. ‘Where before we were getting a lot of city workers looking to do something different after work, we now had a lot of digital nomads and mums working from home.’
To keep both the original community close and reward the new joiners, Bami created a multi-tiered membership scheme, offering discounts to both founding members and early adopters of the digital business. As the brand grows, she is keeping a balance between remaining true to the core offering and catering for a completely new business model. ‘We always had merch at our in-person workshops, but as the community grows, it will become more of a dropshipping operation and a stream of passive income for us.’