NONE OF US could have predicted the impact COVID-19 would have on our businesses. Stay-at-home orders and canceled events have been great for bonding with our pets, but as business owners, social distancing has hurt our bottom line. We have seen a huge impact on all pet services: dog training, grooming, daycare, boarding, pet sitting/dog walking. Every business has felt the impact of this pandemic.
And while we could wallow in self-pity and vent about our losses, or how our governments handled things, I think there is a better use of our time. This is the time to pivot and make changes. This is the time to give strong consideration to the future of your business. This is the time to determine how you will rebound from this crisis and how you will come out stronger in the long run. More than anything else, this should be the wake-up call to ensure you set up your business for success if something like this ever happens again. This is the time to consider lessons learned from a pandemic.
Get your finances in order.
Sadly, despite governing funding and local community/state grants offered to help businesses, there were many small-business owners who weren’t able to apply simply because they didn’t have their financial paperwork up-to-date. Lack of good financial data prevented some from even filling out applications. It’s true that in the pet care industry most of us get involved because we love the dogs.
The financial paperwork isn’t usually the highlight of our work, and it’s easy to put it off in favor of working with the dogs. But this pandemic should be a solid reminder that you have to run your business like a business and you really need to know your numbers. Being able to run reports to understand your payroll, your expenses and your revenue is vital to ensure you are making money. As Peter Drucker states, “What gets measured, gets managed,” and we need to manage the money in our business.
Action step: Whether you are a small sole-proprietorship or a corporation, hire a bookkeeper or learn to do it yourself. Keep your financials up-to-date and study them on a monthly basis.
Have a budget.
In our business consulting at The Dog Gurus, nothing brings on more anxiety and stress than when we ask business owners to put together a budget. Most pet business owners dread the question, and it’s rare that our response to “Do you have a budget” is met with a smile and an up-to-date document. Budgeting is valuable for a number of reasons.
- It gives you a benchmark to know the revenue goal you need to hit in order to make a certain profit.
- It will tell you when you should increase your marketing or staffing.
- It will help you understand the impact of discounts on your bottom line (and it would surprise you to know that many businesses are giving away over 25 percent of their profit without even realizing it).
Having your budget reviewed by an outside consultant can help you identify leaks in your business where you are losing money. And, during COVID-19, a budget would have helped you know what you need to make in unique and original services to mitigate the devastating losses when revenue dipped.
Action step: Complete your budget for 2020. It’s never too late to get one done. Don’t wait until next year. Start today. If you aren’t sure where to begin, just pull your financial data from last year and use that (if you don’t have that data, refer to No. 1).
Have an emergency fund.
U.S. Bureau of Labor Statistics reports that 82 percent of small businesses that fail, do so because of cash flow issues. This could happen because they don’t generate enough profit, because they have outstanding unpaid bills for client services and/or because they simply don’t spend their money wisely. In the case of this pandemic, the immediate halt of most pet care services without any notice due to stay-at-home orders pointed out the real need for all business to have an emergency fund.
Every business should start saving money to build an emergency fund that is equal to three to six months of your expenses. The point of this fund is to cover your business in case of lean times when business isn’t as strong as usual, to cover emergency repairs that come up unexpectedly or to take advantage of opportunities that might arise for your company. Sadly, some businesses shut their doors completely because they had no reserve funds to cover minimal expenses. Do you even know the bare minimum expenses you have to pay regardless of whether or not you have a single paying client? In other words, what are your monthly expenses regardless of what dogs you have in your care? Start saving three to six times that amount as a minimum.
Action step: Starting today, commit to building your emergency fund by setting aside some money each month. You will build it slowly, over time, but you have to start now. Of course, first you also need to ensure your business is profitable and making money, so you have some cash available to save (another reason to get your finances in order and prepare a budget).
Diversify.
During this pandemic, we saw that the businesses that had more diverse offerings were able to take advantage of additional revenue streams and pivot their business model quickly. Having more than one type of service allows companies to make up lost revenue in other areas of their business. This is a simple example of not having all your eggs in one basket. If that basket tips over, you have nothing.
Now is the time to consider adding other revenue streams to your business. This could be other services that are completely different from what you offer now (for instance, adding dog training or grooming to your dog daycare/lodging business) or it could mean adding different formats of your existing service (for instance adding group classes, online training or evaluations to your private dog training lessons). It could also mean adding affiliate services or retail services.
Action step: Think about ways you could offer other revenue streams to your current business model and make a plan to implement those services during 2020.
Pivot. Be Creative. Try new things. Experiment.
I heard these phrases multiple times during the pandemic. Those who come out the strongest will be the businesses that kept looking for the rainbow in the pandemic rainstorm. The businesses that adapted to the new normal of a stay-at-home world, tried new services, and kept in touch with their clients to find out what they needed are the businesses that have the best chance of surviving. A crisis is a time when you can be overcome by the chaos and fear.
But during a crisis there is also the opportunity to find a new path, try new services, experiment with a new business model and create new revenue streams. Those who were able to break through the chaos and fear and get focused on moving forward to take advantage of new opportunities were also able to continue making money, gain new clients and continue their business. The heart of an entrepreneur is one that causes you to continue to adapt and adjust.
Action step: Take stock of your business. Does it look the same now as it did before the pandemic? If so, make changes so you can virus-proof your business for the future. Look at ways you can pivot and adjust your business model in case this happens again. No business should come out of the pandemic looking the same as it started. This is the time for creative adjustments to your business that will help you survive into the future.