What Could We Have Done?

The pandemic has wrought havoc on small businesses across the United States (and, I assume, all around the world). Some businesses, like the outdoor equipment suppliers we have in our town, have made record sales since everyone started trying to get out and away from other humans. Others, such as the businesses that focus on bringing people together--to eat, work out, or socialize--have been struck with huge deficits.

As I listen to the stories of struggling business owners and operators I hear the pain and suffering that results from having to cut payroll, take on debt, and wonder how to plan for every next month with all of its uncertainty. I am an operator of a very small business myself, and we have experienced the pain of covid's economic impact.

At the conclusion of a good commiserating session, when we're about to shrug and get on with our days, several times now I have heard the question, "But what could we have done?" It's rhetorical. The implication is that there is nothing anyone could have done. The appearance of a fast-spreading disease requiring people to stay out of each other's air space brings an inevitability of damage. No, there's nothing we could have done about the slowing of all things in-person.

But from a business perspective, and from a personal perspective, I don't want to give up on that question so fast. What could we have done?

Businesses define life and death financially. If there's enough money, the business carries on. If there's not, it goes under. If the income stream dries up for a time--for 6 months, 12 months, maybe 18 months--then for a business to survive it needs to have cash reserves. If it's going to survive a covid drought of customers, then it's going to need savings.

It occurs to me then that "What could we have done?" is answered by "Save." We could have saved money. We could have operated within a business model that assumes there is a chance, no matter how small, that at some point we'll be crippled for a year or more. So we save up a year's worth of payroll, of electric bills, of essential supplies so that even if the customers aren't coming in right now we can keep telling the world, "We're open and ready when you are!"

Saving is hard. Look at the miserable statistics of Americans' saving habits and see that we're not very good at it. Certainly not good enough that most of us would feel stable if we suddenly fell out of work for a year or more. But life and economics are such complex animals that we ought to assume that we'll suddenly have a break in our income at some point. So saving makes sense.

It's just as hard for small businesses, I think. So much of business is running to catch up with the mercurial interests of a market that always wants something newer, faster, shinier. Every penny must be spent, or else tomorrow's client may not come in through the door. But to be on the edge of bankruptcy all the time makes something like a pandemic fatal. Market anxiety cannot choke out the mandate to save.

We had a surge of interest on our staff last year in the Dave Ramsey phenomenon. What a cool thing: having a group of college students thinking about how to lower their debt, save money, and be in a stronger financial position for the long haul. It takes discipline, and saying "No" to a lot of spending. It sometimes requires feeling like the spendthrift world is passing you by, macchiato in hand, while you're stuck at home drinking drip coffee. It means deferring that dopamine hit of shopping and spending until the frontal lobe says it's wise. It's hard work.

But it makes the difference between riding the tide of a pandemic with a little tighter belt and going under. "What could we have done?" We could have saved money. We could have held back our insatiable desire for cheap and numerous goods in preparation for a couple of lean years. We could have planned for this.

Will we plan for the next one?

~emrys