The Humanity in Business

Too much debt. Bad culture. Product failure. Lack of leadership. Poor execution. These are some of the more typical explanations for why businesses fail. 

Viral outbreaks? Not so much. Strategies for handling viral pandemics aren't typically included in business school courses, an owner's manual, or prized wisdom from grizzled veterans. This is something else entirely, something exogenous to the economic system, something foreign. 

Here at Permanent Equity we have a light-hearted joke that small business is a daily knife fight given how tough competing in the jungles of capitalism can be. But the COVID-19 outbreak is no mere skirmish. It is an existential threat to many small businesses across the country. To the extent that we can help owners think through their responses to this once-in-a-lifetime event, we have written three pieces this week on "Banking and Liquidity,” "How to Cut Expenses", and “What the FFCRA means for Small Business” and plan to publish more as time and resources permit.

While the viral outbreak has caused significant economic pain across broad swaths of society, we are hoping that it reveals the lighter side of humanity over time. Businesses will have to retrench to survive, but also should to take into account the effects on their employees, their suppliers (and their employees), their customers, and their communities. Because this effects all people in all industries, businesses owners must recognize that we are all in the same boat, fighting to survive physically and economically against the virus.

Being in the same boat forces everyone to recognize our shared humanity in these turbulent times. Those who choose to grab turf in the short-term may win the battle, but others who survive the war will not remember their war-time decisions kindly. Now is the time to recognize our common humanity. There are no businesses without customers, there are no customers without jobs, and there are no jobs without businesses. Do your part to ensure that symbiotic relationships continue as best as possible - this is the only hope for recovering our nation's thriving small business ecosystem.

Coronavirus has disrupted supply chains for nearly 75% of U.S. companies (Axios)
+ "For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States -- even if they can get orders filled."

This founder built startups in 2008, 2016 and 2018. Here’s what he’s learned about resiliency (Founder Review)
+ "Their startup set out on a journey with just about everything working against it: inexperienced first-time founders, a crushing economic environment and a big bet on where the industry was heading. The path was twisty and full of challenges, but by 2016 the duo had amassed hundreds of customers and RJMetrics was scooped up by Magento."

COVID-19: implications for business (McKinsey)
+ "Being optimistic about demand recovery is a real problem, especially for companies with working-capital or liquidity shortages and those veering toward bankruptcy. Troubled organizations are more likely to believe in a faster recovery—or a shallower downturn. Facing up to the possibility of a deeper, more protracted downturn is essential, since the options available now, before a recession sets in, may be more palatable than those available later. For example, divestments to provide needed cash can be completed at a higher price today than in a few weeks or months."

How to cut expenses (Permanent Equity)
+ "You can’t cut your way to growth. When bringing a new company into our family of businesses, cutting expenses is not on our to-do list. Most expenses exist for good reasons and we’ve found that after patiently taking the time to fully understand how a business operates, we end up keeping almost all of them."

Q&A: banking and liquidity (Permanent Equity)
+ We received many questions via Twitter on liquidity and banking during times of distress and have summarized our thoughts in this brief Q&A.

What the "Families First Coronavirus Response Act" (FFCRA) means for small business (Permanent Equity)
+ "The FFCRA is an expansive piece of legislation that provides resources and financial assistance to businesses, families and individuals who have been impacted by COVID-19, and aids the efforts of those trying to contain the spread of the virus. The FFCRA has provisions addressing access to free COVID-19 testing, increases to federal Medicaid funding, relaxation of regulations on providing meals to the underprivileged, and emergency grants to enhance state-level federal unemployment insurance assistance. "

Advertising in a downturn (Samuel J. Scott)
+ "Crucially, further data was presented to demonstrate that two key constituent brand relationship metrics – brand usage and brand image – suffered considerably when brands ‘went dark’ (i.e. ceased to spend on communications) for a period of six months or more."

How to market in a recession (Harvard Business Review)
+ "Consumers will be poorer or feel poorer. They will be more frugal and cautious in their expenditures. Reassuring the consumer, holding her hand in a “we’re going to get through this together” manner is a vital ingredient of successful marketing during a recession."

A guide to managing your new remote workers (Harvard Business Review)
+ "Social isolation. Loneliness is one of the most common complaints about remote work, with employees missing the informal social interaction of an office setting. It is thought that extraverts may suffer from isolation more in the short run, particularly if they do not have opportunities to connect with others in their remote-work environment. However, over a longer period of time, isolation can cause any employee to feel less “belonging” to their organization, and can even result in increased intention to leave the company.

6 tips for working from home (Fast Company)
+ "The virus has forced many employers to be far more trusting than perhaps they generally are. And under normal circumstances, it’s one of the biggest stigmas of remote work: The fear that you’re just going to sit on the couch watching TV all day. If you’re working for someone who isn’t completely comfortable with overseeing off-site workers, see if you can structure your actual job so that it builds trust on its own. One easy way to do that is to deal in deliverables if you can.

15 questions about remote work, answered (Harvard Business Review)
+ "First, you should have a group conversation about the new state of affairs. Say, “Hey, folks, it’s a different world. We don’t know how long this is going to last. But I want to make sure you all feel that you have what you need.” This should be followed by a team launch to jump-start this new way of working. Figure out: How often should we communicate? Should it be video, phone, or Slack/Jive/Yammer. If you’re not using one of those social media systems, should you? What’s the best way for us to work together? You’ve got to help people understand how to do remote work and give them confidence that it will work."

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