Consumer Confidence Plunges

This isn’t the kind of news that business owners want to hear as they prepare to reopen their businesses. Consumer confidence has fallen — again.

According to The Conference Board, the gauge of American consumer attitudes about spending dropped to 84.8 – below expectations and down from 91.7 in July.

That’s even far lower than in June when it was 98.3, which was regarded as fair amount of optimism building among consumers as the economy was opening and some people were being called back to work.

However, The Conference Board noted, the summer weeks rolled on with roller coaster reports about coronavirus cases, new waves of deaths, consumers’ distrust of masks and the disease, lack of leadership, lost wages, states pausing their reopenings, schools starting virtually or not starting, fear, and gridlock in Washington over extending unemployment benefits – “It’s all taking a toll on the American consumer.”

Economist Lynn Franco at The Conference Board believes consumers are getting more pessimistic about their economic situation.

“That cloud of uncertainty seems to be covering the majority of consumers,” Franco said. “There’s not much of an expectation that business conditions or employment are going to improve, and we’ve actually seen consumers grow a little bit more negative about their financial well-being.”

“Rising virus cases that are resulting in a pause or rollbacks of reopenings are no doubt weighing on sentiment,” opined Rubeela Farooqi, chief US economist at High Frequency Economics in White Plains, NY. “Consumers are also concerned about job and income prospects. Without virus containment that will allow a fuller reopening of the economy, confidence measures will remain under pressure going forward.”

With contradictory information circulating everywhere, most levelheaded consumers aren’t going to abandon caution like those who are partying as if there is no tomorrow. They are just as watchful about how to resume schooling for their children as they are about going to the local restaurant, supermarket or department store. But they are concerned that while they abide by the rules about masks, social distancing and washing hands, they see that their neighbors demean those safety requirements. Traffic flow patterns in department stores are ignored. Some people wear masks, some wear them incorrectly while others don’t wear them at all.

Nonetheless, even in this unfavorable environment, business owners must open their doors for their benefit as well as their communities and country. But how to do that? I believe that rather than trumpet products, which in most cases consumers still need or want, and prices, business owners should turn down the fanfare and address the real needs of their current and potential consumers. And that is to assuage people’s hesitation, concerns and fears. The marketing should focus on understanding and sympathy with customers’ anxieties and assurances that you are doing everything possible to make their shopping experience safe, secure and enjoyable as it was a year ago. And if you say “no masks, no entry,” then evict those who don’t.

Once you do that, word of mouth will attract shoppers to your stores.

I’ve said this before. You can also avail yourself of a range of cost-free expert consulting services for small businesses. The New Jersey Small Business Development Center is a fantastic institution that helps entrepreneurs launch and grow their businesses https://njsbdc.com/.

 Reopening: Only the Strong will Survive

After six months of cleaning cobwebs in their businesses, owners are ready to open their doors to eager consumers. However, there are serious pitfalls and challenges that must be understood, managed and overcome in order to ensure a successful revival.

Big companies are going bankrupt at an historic pace, but that’s only part of the massacre, reported Bloomberg News. By some accounts, small businesses are disappearing by the thousands amid the covid-19 pandemic, and the drag on the economy from these failures could be huge.

The new business landscape will not be easy to traverse. For example, more than 2,800 businesses in New York City have permanently closed since March 1, according to data from Yelp, the business listing and review site, a higher number than in any other large American city. Small-business owners pointed out they have exhausted federal and local assistance and see no end in sight after months of sharp revenue drops. Now, many are closing their shops and restaurants for good. A shocking 21% of American small businesses report having only about six months to live if economic conditions remain unimproved.

 

19% Believe in their Survivability

According to the results of a new survey from the National Federation of Small Business (NFIB) Research Center released Monday, making matters worse, only 19% of small business owners believe they can make it 7-12 months without an improvement in the economic environment.

Eileen Kean, the state director of NFIB’s New Jersey chapter, observed that “In New Jersey, the results of this survey come as no surprise when many state small businesses were hard hit and unable to come back financially with restrictions still in place and consumers hesitant to patronize certain types of businesses. The travel and entertainment industries continue to suffer and small restaurants still can’t make a profit with no diners allowed indoors. Financial assistance is still needed from state and federal government if they are going to survive this economic crisis.”

Holly Wade, NFIB director of research and policy analysis, noted that “The health crisis is not impacting small businesses equally. Small businesses are adapting to the abrupt shifts in consumer spending, managing customer and employees’ health and safety, and complying with state and local mandates which are all creating additional stress for small business owners. Many of them still need more financial assistance just to keep their doors open and staff on payroll.”

These sobering observations should not dissuade you from your reopening plans. But before hanging an “Open for Business” sign on the door, small businessmen and women must analyze not only their business plan adjusted for this unparalleled environment but also truthfully access their chances for survival. Part of that assessment must include seriously judging your decision and true grit to persevere and thrive. Without passion about what you’re planning to do now in a pandemic atmosphere – yes, coronavirus is still with us and will be for longer than we care to admit – it will be best to retire.

Divide your analysis into these categories: you, your staff, your premises, your product and services, your supply chain and suppliers, your bank, and finally your customers. Are all of these sets ready and committed to your reopening because times will be tough and you will need understanding and assistance when you encounter bumps in the road?

 

Points to Keep in Mind

Entrepreneur magazine suggested that regardless of your individual business situation, if you’re set on staying open for the long haul, small businessmen and women should develop plans to keep the doors open as effectively and consistently as possible. Keep the following strategies in mind.

1. Get creative with limitations

2. Define your vision

3. Openly communicate with employees

4. Do a social distancing check

5. Check in with vendors

6. Start building publicity

7. Be flexible

“We’re in unprecedented times, and even with detailed planning and work ahead of time, you’ll probably still face unforeseen challenges as you reopen. You’ll need to be flexible and ready to adjust as situations change and challenges arise. Approach your company with this in mind and encourage your employees to adopt this same mindset as you negotiate the changing landscape of running your business during the crisis,” Entrepreneur advised.

A variety of local, state and federal agencies have composed a series of rules and regulations about how to reopen your business in order to keep you, your employees and consumers safe and happy while they engage with your business. Keep in mind the ones that fall into the low hanging fruit group such as disinfecting premises, social distancing and monitoring health. Their suggestions do not pertain to the strictly business side of your establishment.

Consumers are leery – no, perhaps scared – to wander beyond their homes and shop in person. Obviously this impacts your sales. This concern is not restricted to any single location but rather it exists everywhere. That is why many so-called “brick” businesses successfully converted to “click” businesses. For your endeavor that would be a sign of a flexible approach to growing sales.

 

From Bricks to Clicks

AP News reported that small businesses, especially those selling non-necessities like apparel, are struggling months after state and local governments lifted shutdown orders aimed at containing the virus. With the virus far from under control in many areas, consumers worried about getting sick are staying home and doing their purchasing online or, if they venture out, going to big stores like Walmart and Target where they can do one-stop shopping, AP wrote.

“The weak sales and erratic customer traffic have forced store owners to be creative in hopes of persuading customers to stop in rather than order from a big online retailer. But for some owners, disappointing sales and an uncertain outlook have forced them to close their stores for good and stake the future of their businesses on the internet,” it noted.

If you’re involved in foodservice, consumers are concerned that you’ll be forced to close your business, according to the National Restaurant Association. A majority of adults have said they know of a restaurant in their community that has permanently closed during the coronavirus outbreak.

This was confirmed in a new nationwide survey commissioned by the National Restaurant Association, which found that 78% of adults agree that going out to their favorite restaurant is one of the things they missed most during the last few months. Restaurants are also focal points for networking. Consumers agree that restaurants are more than just a place to grab a quick bite or celebrate an occasion. Indeed, 88% of adults say restaurants are an important part of their community.

Consequently, restaurateurs must ensure that their patrons are as safe entering their restaurants and eating their food today as they were a year ago. This level of credibility will keep your eatery profitable. Don’t forget to consult with your foodservice distributor or broadliner who is experienced and trained in providing you, its customer, with a library of suggestions on how to survive.

Another point about flexibility in foodservice, is that smaller is more profitable. Pat Cobe of Restaurant Business wrote “Call it menu simplication, streamlining or shrinkage. It’s happening in every segment of the industry, from quick-service to fine dining, as operators downsize menus to make them more efficient and profitable.

“It started at the beginning of the pandemic when takeout and delivery was the only game in town. Restaurants that remained open pared back their menus to items that traveled well and wouldn’t tax understaffed kitchens. Now that outdoor seating and limited dine-in service is available, smaller menus still make sense in many operations.”

Foodservice analyst Technomic data support the evidence that operators are eliminating SKUs and doubling down on core products. In Q2 of 2020, the menu categories that shrunk the most were adult beverages (-79.2%), kids menus (-18.9%), add-ons (-9.7%) and desserts (-4.5%), Technomic reported.

 

Inform Key Parties & Partners

As you proceed with your opening, be sure to stay in touch with your staff, your supply chain and suppliers, bank and your customers. Tell them what’s in store for them next week, next month, next season. Your staff wants to have a sense of security about its employment. Your suppliers and vendors want to have a sense of security about your financial viability. Your bank wants to know that you’re serious about staying in business. Your customers want to have a sense of security that you will be in business to satisfy their needs.

Differentiation in the marketplace will help you stand out from the businesses that have reopened in your marketplace. It’s called marketing creativity. I have written in the past that sustainability is one major, popular feature will help you grow your business and today it will keep your business top of mind for customers and media.

If you’re brave enough to launch a business in these tough times, I came across an interesting idea. Try tea, one of the most popular beverages around the world. Small Business Trends reported that starting a business that offers this healthy and delicious drink can be a rewarding and profitable experience. Read its list of popular teas: https://smallbiztrends.com/2020/08/tea-franchises.html

You can also avail yourselves of a range of cost-free consulting services for small businesses. The New Jersey Small Business Development Center comes to mind as a fantastic institution that helps entrepreneurs launch and grow their businesses https://njsbdc.com/. All states have comparable organizations. Try them and they’ll help you be a strong and positive statistic.