How the SBDC Can Help with COVID-19 Response

Now that we are several months into the economic crisis associated with COVID-19, many small business owners feel at a loss for how to make informed decisions about whether the business needs economic disaster recovery assistance – or further assistance! – and how to cover expenses moving into the future. Many have also discovered that the bookkeeping practices or systems that they had in place prior to the crisis were not adequate to help the owner understand costs, pricing, future cash flow, and profitability. Thinking through these matters is something with which Business Consultants at America’s SBDC Iowa can help. Our Business Consultants are knowledgeable about core elements of business management, educated about recovery assistance programs, understand what small businesses are experiencing and want to help.

Here is an example of how the financial part of a conversation with an SBDC Consultant would
start during COVID-19 response and recovery:

 How are doing right now? Do you have enough cash to cover your current expenses?
Are you worried about current or future ability to cover your business expenses?
 What are your normal monthly fixed operating costs such as rent, utilities, insurance,
software subscriptions, and fixed (not variable) payroll expenses?
 What are your normal variable costs such as variable (not fixed) payroll, freight,
materials, and costs associated with sales?
 How do you pay yourself (salary, owner’s draw, distributions)?
 How much in sales do you need in order to cover your cost of goods sold plus your
operating expenses? In other words, what is the level at which you break even? If you
do not know, think about what was the last month your profit was $0 or close to it. That
should be close to your break-even number.
 How much profit do you need to be able to make in a normal year?
 In a normal year, what are monthly sales at this time of year?
 What percentage are your sales of this year compared to last?
 For what assistance (e.g., EIDL, PPP), if any, have you already applied? Have you
received any funds? Are you expecting to receive any funds?
 What will those funds cover? For how long? Do they need to be repaid?
 What other expenses need to be covered? Over what time period?
 When do you think that sales (and other activities affecting cash flow) will return to
something like normal?

A Business Consultant with America’s SBDC Iowa can also assist with putting together monthly cash flow projections based on educated assumptions about recovery. If there is a financial gap, the conversation would then move into discussion about the assistance programs, qualifications, allowable uses of funds and how to assign expenses needing to be covered to various expense buckets in order to find the right programs. If there is still a gap, the Consultant would try to figure out any other options for bringing in capital as well as strategies for reducing or deferring expenses. In the conversation, the two of you might also consider the projected impact of these options on your balance sheet. Moreover, Consultants at the SBDC can advise on how to start or improve a bookkeeping system. It is important for business owners to know how to use their system to access information pertinent to making sound financial decisions.

The team at America’s SBDC Iowa is a resource partner of the U.S. SBA and stays informed about the latest federal, state and local programs for assisting small businesses during COVID- 19 response and recovery. An appointment for confidential, no-cost business advising at one of our 15 regional centers across the state of Iowa can be requested on our website: http://iowasbdc.org To prepare for a meeting with an SBDC Business Consultant, it would be helpful to gather together recent income tax returns, payroll reports, an itemization of other expenses, and documentation of monthly sales records for this year and for last and any other information that you have that you think is relevant to understanding your financial situation moving forward.

In the meantime, for management and financial management tips during the disaster response, please see our Back2Biz Guidebook:
/wp-content/uploads/2020/05/BacktoBiz-guidebook-final.pdf

We look forward to working with you!

About The SBDC and the Author
The Iowa SBDC provides no cost technical service and advice for Iowa Small Businesses and individuals looking to start a business. The 15 centers throughout Iowa are run by small business experts and counselors who have the experience and expertise to confidently help on a number of topics.

Scott Swenson is the Regional Director of the SBDC at Kirkwood Community College in Cedar Rapids. He has been with the organization since October of 2013. He has experience in business disaster recovery as well as marketing, sales, and entrepreneurship.

Dr. Laurie Pieper is America’s SBDC Iowa Tech Director. She leads the Rural Iowa Development Initiative and works with clients and resource partners around the state to develop opportunities for the successful commercialization of business technologies, products, and services.

How to Succeed in Building an Online Amazon Retail Business

COVID-19 has caused many small businesses to rethink their selling methods. Just because your doors are closed, doesn’t mean you have to stop selling your products. Becoming an Amazon retailer will help you sell your products online. Follow these steps from Todd Rausch, Western Iowa Tech SBDC Regional Director, to learn how to start your Amazon retail business:

  1. Create an Amazon retailers account https://sell.amazon.com/?ld=AZFSSOA&ref_=footer_soa
  2. Use Fulfillment by Amazon (FBA). This is important. It warehouses with Amazon. They get a larger cut, but you don’t have to meet Prime shipping demands because they handle it. Anytime someone searches a product on Amazon, products in their warehouse go to the top of the search results.
  3. Study all of their tutorials. 
  4. Pick a category you like. Pick one that works for you. In the search bar type in “top 100 _ _ _”. Top 100 electronics, for example. This shows the current top 100 selling products in that category.
  5. Pick 7 to 12 products you want for your inventory that you will upload to your sellers account. 
  6. Find suppliers for those products that do not have a minimum buy. In other words, you are going to set up distributor accounts with these suppliers, but you do not want a minimum buy on these as that will be a big demand on your time.
  7. Order the products. They will ship to you. Contact Amazon and they will tell you where they want you to send them to the warehouse.
  8. Upload your inventory to your Amazon store. 
  9. Make your pricing reflect what you need to make on the product. Don’t worry about being the lowest price.

The Goal

Start out with $1,000 – $3,000 worth of product and do inventory turns, hopefully 52 inventory turns a year. Sending inventory to replenish what is in the warehouse each week will yield between $50,000 – $150,000 in sales and around $15,000 – $60,000 in profit a year. Aim to have at least 15% – 30% of revenue come from online sales.

Interesting Statistics

  • 42% of US online retail sales are through Amazon
  • 25% of US adults have an Amazon Prime account
  • Over 2,000,000 people are selling through Amazon

 

About America’s SBDC Iowa SBDC and the Author
Todd Rausch, Regional Director for the Western Iowa Tech SBDC in Sioux City, has been in the position since 2013. He has been an online retailer for 8 years, and 4 years of that as an Amazon retailing merchant. He is a veteran and has a passion for helping small businesses succeed.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops.

For more information on America’s SBDC Iowa programs or services, visit www.iowasbdc.orghttps://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.

Engaging Through Remote Work

For many businesses, COVID-19 will bring about a new way of doing business as normal. An increase in employees working from home (or other safe out-of-the-office location) is one example. What was initially a short-term measure to accommodate social distancing for pandemic mitigation will, for many businesses, result in a long-term increase in remote work to keep staff healthy and productive. With this change in workforce structure come potential management challenges but also potential benefits. Businesses that are undergoing a long-term shift toward remote work should adopt strategies for making sure that they have the right people in the right positions, for maintaining important connections with (and for) employees who will no longer go to the office (or customers’ locations) on a regular basis and for fully capturing the potential advantages of remote work; and they should include employee input in the planning processes.

Business owners who had not previously embraced remote work might worry that if the company office, other employees and customers are out of sight long-term, they will be out of mind and that, as a consequence, work ethic, performance, collaboration, dedication to the company or dedication to the company’s clientele will decline. “Out of sight, out of mind” worries, however, can go in both directions; and employers should also be thinking about how they can let their remote employees feel seen and valued without micromanaging them. Other fundamental questions are to what extent job descriptions need to change, whether the right people are still going to be in the right jobs, and how employees can be set up for success rather than failure in the transition. 

Improvements over the existing way of doing business can also come from a shift toward more remote work. If the right people are in the right jobs and managed well, employees can be more productive (e.g. because they have more ability to focus on critical tasks) and more engaged (e.g., because they are appreciative of having more flexibility with their schedules). Remote work broadens the available labor pool, can be used as a recruitment incentive and creates more potential to hire employees in other time zones which might increase coverage area (e.g., for sales or customer service). It can also help companies cut costs on company offices. Moreover, it might inspire a business to develop new products or offer new services.

 

Tips for Successful Transition

As a company considers shifting long-term toward increased remote work, the business owner/management should evaluate job functions and their suitability to be performed remotely. 

  • What functions remain as is with remote work?
  • What functions go away with remote work? (Are there functions that need to be kept on location?)
  • What new functions can arise with remote work?
  • What are the physical, technological and other needs to support those functions remotely?
  • What metrics are appropriate for evaluating remote job performance?

In converting positions to remote work, it is important to have the right employees performing the right remote job functions. 

  • What skills and personal characteristics does an employee need to possess in order to perform remotely in general and as well as to perform specific functions?
  • Which employees are capable of transitioning to remote work based both on ability to perform the job functions and also capacity to thrive in a remote work environment?
  • Who needs what physical, technological or other support in order to perform well?

It is important to help employees understand what the changes mean to their place in the company.  

  • Utilize employee input in setting goals and objectives.
  • Define any new roles and responsibilities as well as delineate ones that no longer exist.
  • Be clear about why the changes are important and why the employees are still important.
  • Anticipate and help mitigate undesirable challenges employees new to remote work might encounter, e.g., by providing training to assist with new technological needs.
  • Agree upon the benchmarks against which they will be evaluated, time frame for adjustment and resources available to assist them.

Recognize that a change to long-term remote work may also necessitate changes to management style in order to avoid micromanagement and to keep employees connected, engaged and feeling valued. 

  • Figure out what communication channels work best for various purposes ranging from quick questions, to emergency situations, to lengthy discussions, to sharing a funny story about the day.
  • During team meetings – in person or online – create opportunities for participation and allow some unstructured time for team members to interact.
  • Authorize team members to take leadership when appropriate or needed.
  • Put in place professional development and advancement opportunities. Feeling stuck in a position can undermine motivation especially if employees feel disconnected.
  • Don’t treat remote employees like they are invisible. Make a point of seeing and acknowledging their contributions and achievements. 
  • Be aware of the potential for burn-out and find ways to reduce the risk. One of the common characteristics of people who are suited to be remote employees is that they are highly self-motivated. This, in combination with working days that don’t have a set ending time, can result in a habit of working excessively long hours.
  • Take time to get to know new employees and to learn how existing employees are doing in new roles.

After the transition to increased remote work, it will be important for businesses to assess how it is affecting them, learn from experiences, and continue to improve. 

Since the initial increase in remote work was for many businesses a rapidly implemented response to keep their people healthy during the pandemic, it was not thought through as a long-term option. Now that the immediate response has taken place and more is understood about the evolving global situation, businesses should acquire employee input and think through the potential benefits and challenges of the transition to increased remote work. If it is right for them, they can then develop and implement a plan for remote work and be in a position to pursue new opportunities that it can create.

 

 

About America’s SBDC Iowa & the Author

Dr. Laurie Pieper is Amercia’s SBDC Iowa Tech Director. She leads the Rural Iowa Development Initiative and works with clients and resource partners around the state to develop opportunities for the successful commercialization of business technologies, products and services. Originally trained as an analytical philosopher, she has a Ph.D. from UCLA and has held faculty appointments at University of Oregon and Kansas State University.  Dr. Pieper was a business owner for many years and enjoys using her background in education and in entrepreneurship to help small businesses set and reach their goals.

America’s SBDC Iowa is an outreach program of Iowa State University’s Ivy College of Business and the Office of Economic Development and Industry Relations. Funded in part through a cooperative agreement with the U.S. Small Business Administration, America’s SBDC Iowa has 15 regional assistance centers located strategically across the state. Since program inception in 1981, the SBDC has helped Iowa businesses and entrepreneurs through no fee, confidential, customized, professional business counseling and practical, affordable training workshops.

For more information on America’s SBDC Iowa programs or services, call (515) 294-2030 or visit www.iowasbdc.orghttps://www.facebook.com/AmericasSBDCIowa, or @IowaSBDC on Instagram and Twitter.