Business Relationships in Times of Crisis

These challenging times present particular challenges to small business.  Notwithstanding efforts to stimulate the economy, the fact remains that many businesses simply can’t function at a sustainable level without open doors and customers who require inventory, raw materials or products to sell.  Empirical data supports a substantial downturn in gross domestic production such that the federal government has declined to publish economic forecast data for the summer of 2020.  Millions have been separated from employment – either temporarily or permanently.  Every business and every businessperson has felt the economic effect of the pandemic.

While small business may never be the same, it is not dead.  We all know the United States economy is driven by small to medium employers no matter the media focus on big industry.  There will no doubt be consolidation in nearly every sector of the economy from construction to retail.  History has proven that, for the savvy businessperson, trying times like these bring opportunity.  Taking advantage of opportunity requires strong, focused and forward thinking business relationships.  

Of course, important relationships include those both internal and external to the business.  Internally, creativity, support and leadership from management is imperative.  Key team members charged with effectuating policy and implementing change in order to manage the crisis must be recognized for the key role they play, and supported throughout the leadership tree.  Honest, transparent and compassionate communication is key.  Future success is dependent upon stability of the work force such that the business can be poised to push forward as conditions improve.  Success should be rewarded.   In turn, the business that supports its employees through a scary time may be rewarded with a loyal, dedicated and stable work force.

The same is true for external business relationships.  Honest communication with vendors, many of whom are similarly suffering, facilitates trust.  Meeting commitments even more so.   If a commitment cannot be met, communication as to the reasons why and a proposal or plan to address any deficiency often avoids exacerbation of the unpleasant and the exercise of costly remedies such as litigation.   The other side of the business coin is the relationship with the customer.  Delivery of the promised service or product notwithstanding the challenges presented by the pandemic may result in even stronger ties giving rise to a long term and solid cooperative.  At this point, one less thing to worry about is appreciated and remembered.   

In business ownership, a crisis may bring about real opportunity to consolidate through buy out of a partner who wants to take risk, some of which was clearly unforeseen, off the table.  Many who see business suffer will seek the relative safety of cash vs. the prospect of future income.  The corollary is also true, a well-positioned business in the position to acquire operations or talent may find bargains or opportunities not available in a strong economy.   Unfortunately, sometimes crisis exacerbates the flaws in the best laid plans, exposes the chinks in the armor and drives a wedge through what has been a tolerable, but less than perfect relationship between business owners.  If a close look at the financials has revealed disparity between value and service, financial impropriety or other irreconcilable differences, such that your business ownership relationship is no longer working, it may be that the interruption in activity is a call to action.  

Overall, the main take away from these considerations for small business owners is this: the success of your business remains, as it always has, dependent upon the decisions you make, and your willingness to learn and adapt in this ever-changing environment.    Government aid, while appropriate and essential during these unprecedented times, is limited in duration and effect.  Businesses that thrive will be those that take a long range view of the challenges ahead, and are willing to consider a wide range of strategies to find the most effective plan for the future of the enterprise.