New and established entrepreneurs are confronted with problems at the best of times. They go through challenges to market their companies, gather investors, scale their companies, and they must overcome “slow periods.” Throughout the COVID-19 pandemic, entrepreneurs are getting hit especially hard when their already new companies are being impacted by a global situation that is evolving every day. Finding unique and effective ways to manage these periods will prove to be imperative for companies who are hoping to come out of this down period intact.
Wayne Shulick is an entrepreneur from Philadelphia, Pennsylvania. He has owned numerous high-end retail stores and night clubs over the past 20 years. He started in the clothing business and built a chain, Premium Denim, and that led him into the night life business and his club, Denim Lounge. Wayne ran Denim Lounge from 2006 onward until he sold it in 2012. He explains some of the difficulties that entrepreneurs are being faced with due to the COVID-19 pandemic.
Most — if not all — new companies struggle with financing from the beginning. Companies need to spend money on marketing, staffing, inventory, and much more. In the age of COVID-19, companies’ bank accounts are being stretched even further, says Wayne Shulick. Most offices and warehouses are still closed or operating at reduced rates, with companies still being responsible for footing the bill on rental spaces. With the rise of unemployment rates and the volatility of the stock market since the beginning of the pandemic, potential clients and investors aren’t able to help finance these already vulnerable companies. The resources that entrepreneurs do have must be stretched throughout the course of the pandemic and it is currently unknown how long that will last.
As of April 30, 30 million Americans filed for initial unemployment claims since mid-March. This is because many companies shut down operations and downsized in order to ensure their survival. Many start-ups already consist of small teams as they grow and scale.
The pandemic has put many entrepreneurs in the difficult position of deciding who on the team is essential to keep on and deciding who to temporally or permanently dismiss while the company holds on to its limited resources. This also puts strain on the employees that continue to work with the company, notes Wayne Shulick, as they may not have faith that the company can weather the storm, resulting in poor employee morale.
Supply Chain Disruptions
Most industries are being affected by disruptions to their supply chain during the pandemic. According to a report by completed by Dun and Bradstreet, 94% of the Fortune 1000 companies have primary components of their supply chain linked to China, the center of the pandemic.
The breakdown of the supply chain impacts both deadlines for orders in the short-term, as well as the assurance of goodwill in the long-term, says Wayne Shulick. This makes the future for many companies that deal with goods and services uncertain.
Finally, many companies are being required to take action during this pandemic to show the public that they care. They are cutting prices, offering incentives, and offering free shipping to help their clients. Some larger manufacturers have shifted their efforts to create and distribute safety equipment like face masks and gowns, and some larger companies are even donating safety equipment. While these measures prove the companies’ commitment to the public, they also prove to be strong public relation moves, notes Wayne Shulick.
The issue is that many smaller and newly established companies may not be in a financial position to keep up with their competitors, running the risk of losing business in the long-term. As well, newer entrepreneurs lack the experience that seasoned ones do, so they may not be able to come to a decision on what action to take. By taking too long to make an announcement on the action — or worse, making no decision at all to respond to the crisis — will inevitably affect consumer trust, putting the company in jeopardy.
Final Thoughts from Wayne Shulick
While the pandemic is causing problems for entrepreneurs at all levels, it also presents unique opportunities. In essence, this a true sink or swim situation, says Wayne Shulick. If entrepreneurs are able to persevere through this time, the chances are higher that they will continue to push through and succeed in the future.
The good news is, there is help on the way. The U.S. government is offering relief to taxpayers as well as support for small businesses during this time. Other bigger organizations also realize how vital start-ups are to the economy. Companies like Facebook, Kabbage, and Citibank are offering support to small businesses. This situation is causing global communities to come together to protect others and to protect the delicate entrepreneur ecosystem.