You’ve seen the reports about small businesses being greatly threatened in the wake of the pandemic. And if you’re a business owner, you’ve likely felt the brunt of its effects firsthand.
The struggle to survive is real, but in the long term, small businesses will be the ones that thrive. Here’s why you can be optimistic and embrace the advantages of staying and thinking small.
Dealing with complexity and limits
On the surface, the difficulties faced by businesses (and people) around the globe in 2020 can be boiled down to just two factors: the coronavirus and the recession it triggered. Consequently, it’s easy for anyone to dismiss this as a bad year, wait for the vaccine to come out, and focus on short-term solutions to survive.
But the truth is that in the big picture, the impact of the pandemic was all too predictable. Even without foreseeing the details, experts had warned that our networked world was approaching dangerous levels of complexity. And complexity puts systems at risk for a disastrous meltdown.
We had been pushing against various limits to growth for several decades. Rising concern over the environment and the drive to be more sustainable was one manifestation of this problem. So, too, was the rising level of inequality across many countries. The increasing volatility of oil prices likewise stems from resource depletion.
Even Jeff Bezos, currently the world’s richest man, acknowledged that the planet’s future resources were limited, recommending that we turn to outer space to support further growth. The warning signs were already there for everyone to see; Covid-19 merely tipped the world over the edge.
Bigger isn’t always better
None of this is intended to forecast inevitable gloom and doom, of course. No one can predict the future, and humanity might collectively correct its approach now that we’ve had our wake-up call.
But organizations don’t change smoothly. And business owners know that because they deal with significant decisions and disruptions all the time. A simple upgrade to use cloud technology, for instance, must be accompanied by further investments in data loss prevention solutions and additional cybersecurity training for the personnel. You have to overcome inertia to move up a level. And that same inertia exists when you attempt to go down.
Big businesses have survived the pandemic and recession due to their greater access to resources. But the period of recovery is still fraught with uncertainty. Further outbreaks or complications might occur to delay a return to normal.
Meanwhile, the costs of doing business as usual are adding up. The cheap labor involved in most global supply chains can be shut down anytime if safety concerns arise. Workers need to spend more time disinfecting products and surfaces. All those little inefficiencies make current operating models unsustainable.
Thus, more big companies are now looking to operate like small businesses. They are trying to implement agile principles, but in the process, they encounter organizational resistance. It’s not so easy to pivot and rescale. And that is the one great long-term advantage enjoyed by small businesses; they are inherently agile.
A small scale is sustainable
Indeed, the short-term outlook for small businesses is rather grim. Federal aid programs have run their course, and the pace of economic recovery is slower than most owners would’ve hoped for.
There are no easy decisions in this climate. You don’t want your people to lose their jobs, but if your sales aren’t cutting it, you can’t pay them either.
There’s no shame in doing what’s necessary. Sometimes that means a furlough or temporarily closing your doors altogether. Maybe it could mean pivoting your business. If you find a creative way to harness your core competencies and bring new products and services to meet market demands, you can start thriving again.
But the main takeaway from this time of upheaval and chaos is that you can’t overreach. The biggest error that leaders and managers made in the years past was thinking that business assumptions would continue working indefinitely into the future. This year’s disruption proved them wrong. And the disruptions to come in future years will pose similar problems for anyone who continues to operate in an unsustainable fashion.
Take heart from the world’s oldest businesses. These companies have seen it all; civil wars, world wars, pandemics, recessions, and government collapses. They have survived by staying small, building ties with the local community, and focusing on sustainability rather than maximizing growth and profits. Do the same, and you’ll be able to keep going in the future.