Why collaborating with other businesses may be a smart financial move post-COVID-19
Wednesday, 29 July 2020
For many businesses, COVID-19 has been a devastating event that has highlighted how vulnerable client-facing businesses can be.
In many cases, business foot traﬃc was decimated overnight. Entrepreneurs who are ﬁghting for survival are now looking for new and innovative ways to keep their businesses open.
As business owners navigate this chaotic time, many have chosen to embrace beneﬁcial partnerships as a strategy to keep their doors open. In many cases, these synergies are proving to be a much more eﬀective way to run their business.
Why partner with other businesses?
With consumers unnerved by the uncertainty and confusion surrounding current health mandates, business owners are now tasked with not only reassuring their customers it's safe to engage with them, but also mitigating their business' ﬁnancial losses. Entering into a partnership can be a very eﬀective way to lower business risks.
Business owners may decide to partner with one another as a way to manage and lower their ﬁxed expenses by bringing in another business to share space, for instance. If a business is unable to renegotiate their lease, but is able to work with another company (or companies)1, this may be an eﬀective way to manage monthly expenses.
Collaboration may also lead to more informed business owners as they pool their resources. By strategizing together, business owners looking for ways to keep their doors open may gain access to innovative and fresh ideas they may not have considered previously.
What types of collaborations should you consider?
As restaurants, clothing stores and other businesses navigate their "new normal," opportunities to work together are as unique as the times in which we're currently living.
Here are some examples of businesses supporting one another that may not have been created if it weren't for the current situation and some of the limitations on movement being placed on U.S. citizens:
- Event pop-ups: Some businesses are collaborating on one-time events inside their retail or restaurant space. One or more other businesses may participate in unique programming that brings in customers either in- person or via the internet.
- Providing new services: In Denver, Colorado, a local vegan restaurant paired with a zero-waste grocery delivery service. Customers pick up their groceries at the restaurant each week. This has proven to be an eﬀective business strategy as happy customers sing the praises of both businesses on social media and to friends. Many local breweries have also begun producing hand sanitizer in addition to beer.
- Helping comply with local COVID mandates: Breweries in Denver partnered with food trucks in order to reopen as they had to serve food in order to comply with local COVID mandates. This was a winning partnership both for the brewery and its customers.
- Pooling information resources: Congress passed the CARES Act, the Small Business Administration is providing loans and small grants for small businesses, and companies such as PayPal and Google, as well as banks, are oﬀering grants, loans and initiatives to help businesses stay aﬂoat. Many owners may ﬁnd it diﬃcult to keep track of all such programs, but by collaborating with others and combining their collective knowledge, they can share information with one another and avoid losing out on opportunities.
- As a marketing strategy: For businesses that are rethinking their marketing expenditures, partnering with other companies to share their products, goods or services via other organizations' social media may be a smart way to gain social capital without spending on marketing.
The case for embracing unique business collaboration
It's unclear to everyone when we will be ﬁnished dealing with COVID-19. What is clear is that it may be quite a while before we're back to normal. During the best of times, entrepreneurs ﬁnd themselves working against the unknown. Now more than ever, in order for businesses to survive, it's imperative that entrepreneurs rethink how they do business. For many, they may ﬁnd that their new business model is even better than the previous one.
As business overhead is lowered, entrepreneurs can focus on solidifying the ﬁnancial pillars that will hopefully insure their business's long-term success. By pooling resources with others, they can grow their emergency fund or business reserves in case of future unexpected events. Entrepreneurs can also open up dedicated accounts speciﬁcally for taxes or other important line items that are a key part of running a business.
Creative business partnerships post-COVID-19 may be the key to a lasting business pivot that sustains your business for years to come.
1. Most commercial leases set forth the scope of what businesses may operate on the premises.
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