If you’re watching the news, you might feel like the world is ending.
Storefronts are closed, and services businesses are frozen in place, unable to operate due to social distancing and shelter-in-place guidelines. Particularly if you run a small business, COVID-19 has dramatically changed how we all live and work.
And it’s already taken its toll on the economy.
Academics are saying the pandemic’s economic impact may surpass the 2008 recession altogether. As much as a third of the U.S. economy may be shut down. Real unemployment could be near 25%, and millions will file for unemployment assistance every week.
But this economic devastation is unlike any Americans have faced in the past.
How The Pandemic’s Economic Impact Is Different
Unlike downturns we’ve seen before, the pandemic’s impact is unique.
Economic downturns which stem from war, financial crises and other events spike consumer concern and hesitancy. Basically, fear leads consumers to decrease their spending, especially discretionary spending.
Different from ever before, COVID-19 is forcing consumers to stay inside — forcing consumers not to spend money. Consumers aren’t only scared to spend money for many goods and services, they’re currently unable to. And it’s not just discretionary spending, it’s spending tied to everyday needs and wants like haircuts, check-ups, home and vehicle maintenance, and countless others.
This difference is important.
Economic recoveries from prior crises were gradual. It took time for consumers to regain confidence and certainty. In the short term, the recovery from the pandemic is likely to look very, very different. The pent-up demand for what were once mundane, frequent purchases is going to reappear in full force as people feel free to move about their communities.
What is the surge?
What happens when people feel safe to move about the country again?
Unlike other recessions, consumer spending on goods and services they’ve had to forego isn’t going to be gradual. The country will open up for business again locally, regionally and nationally as government and health officials feel it’s safe. Suddenly, consumers will be allowed to go out and spend again, and boy will they spend.
This predicted spike in consumer spending is called the surge.
For months, while we’ve been trapped inside not spending, we’ve been thinking (even dreaming) about the things we need to catch up on once we’re able to. The oil changes, the haircuts, the check-ups. Almost every individual who’s been stuck inside has a list of 5 or more things they can’t wait to purchase once this crisis wanes.
In the immediate weeks following the “all clear,” this pent-up demand is going to produce a surge in the local economies that are ‘open for business’ like we’ve never seen before.
When that demand spikes — surges — will your business be ready?
Preparing for the Surge
I’m not insensitive to the fact that many business owners are out of work right now. So it may be hard to think about what’s going to happen once the pandemic passes. But if you prepare for the surge now, if you’re ready for it, it could be the difference in being temporarily out of work and permanently shutting your doors.
Imagine this. You’re finally ready to get that haircut you’ve been waiting for. You call your favorite barber or stylist, and… they’re booked for the next 3 weeks. Suddenly everyone else needs a haircut too.
That phenomenon isn’t only realistic, it’ll permeate almost every industry. Demand could outweigh supply (or at least immediate availability) which will be important to many consumers. How quickly can they get what they’ve been waiting months for?
Brand loyalty will go out the window, and consumers will begin searching for any business near them who can meet their needs soonest. Will yours be that business?
There’s a lot of advice out there about how to run your business now and during the post-pandemic surge. I’ve come up with 3 simple truths about your business’s current situation.
- No one will buy from you if they don’t know you’re open or what you are offering.
- No one will buy from you if they don’t know it’s simple and safe.
- People are more likely to buy from you if they know you help others.
Now’s the time to communicate, commit to your team and customers’ safety, and invest in the community that supports you.
Steps to Take Now
Even if you’re closed for now:
- Overcommunicate when you’ll be open or your plans for reopening. Invest anything you can afford to remain visible and findable online.
- Stay in touch with your past clients, and be honest about steps you’re taking to protect everyone’s safety once this is all over.
- Recommit to your community. Support other struggling small businesses and members of the community with your goods, services and time.
We’ll continue sharing tips on how to prepare for the post-pandemic surge in spending. What you do now will set your business up for success in the coming weeks and months.
What are you doing to prepare for the surge?