From Striving to Thriving in the Time of Covid

Tony Gallo:

Hey everybody. It's Tony Gallo from the Lorain County Chamber of Commerce. We're here with business fluent with our third episode, and I want to introduce, Nate Ward and Rick Slark who are going to be our guests today. Why don't we start with you, Nate?

Nate Ward:

Hi, good afternoon. My name is Nate Ward. I'm the Director of the Global Business Center at Cleveland State University. And I'm also a trade counselor for the state of Ohio with the Ohio Small Business Development Centers.

Rick Slark:

And I'm Rick Slark. I have a consulting group called Slark Consulting Group, and I do a lot of business advising with different SBDCs in Ohio.

Lisa Hutson:

Awesome. Thanks you guys. I appreciate you all being here. So obviously COVID 19 has impacted businesses in a lot of different ways, but what are some of the things you're seeing in the businesses that you work with, with how COVID has impacted them?

Rick Slark:

So what I've been seeing is there's two things. Some positively, some businesses and industries are busier than ever. They're better revenue, better profit margins. And then of course we all know that many have been affected negatively with a loss of revenue, reduced customers, a loss of loyalty and a lot of higher expenses because of the personal protection equipment that they need.

Nate Ward:

Businesses have really been put into two camps. I think it's exacerbated those who are winners and losers, those in a position to adapt to it. But you look at the service industry, the hospitality industry. So many of them have just been devastated even as we speak here right now, there's lots of places that have not been able to safely re-open or doing so in such a way that they're just on life support. But there have been on the other hand, companies that have greatly benefited from it, any company that has any relationship to those products that are in demand, the PPE, the medical device, there's been a number of my clients where that was a really small part of their business prior to the pandemic. And the doors have been blown off of them. And they've entirely pivoted to satisfy the demand of those equipments or even a small product.

Lisa Hutson:

I think there's been some trends in certain industries and in certain sectors. Besides the industries that produce the personal protection equipment, what other industries have you seen doing well in COVID?

Rick Slark:

Yep. What I'm seeing is the tech industries are doing terrific, digital marketing companies, home fitness, telemedicine, they are just exploding. Anything to do with at home, remodeling, things of that nature, home entertainment, just exploding for sure.
Nate Ward:

Yeah. I want a second that I think that there's also been a couple of surprises for me. One of my clients is a company that produces balloons, they are manufacturers of balloons and they said that their business has just been through the roof. Although it's been a diversion, those balloons aren't going to party centers and hotels and other places, they've opened it up more and more so that people could buy for their home. And so they're having home parties, they're having their car parades, they're having weddings at people's houses and private residences. So the demand for them is only increased.

Lisa Hutson:

Yeah. Who would have thought COVID would be good for the balloon industry. Right?

Nate Ward:

Right.

Lisa Hutson:

Well, I think it goes to show that, if I've heard this word once, I've heard it a hundred times pivot, but I do think that the companies that have been able to pivot are the ones being as successful, and they recognize those niches, and were able to transfer from maybe a storefront business to a more digital online and tapping into all those people at home.

Rick Slark:

For sure. Their pivoting is so crucial where they could cut their cost or focus on their hero products, go to delivery. We have several like little bakeries that they now do curbside pickup and delivery and people that have been able to do those things have really, really extended their reach.

Lisa Hutson:

Yeah. I think like you guys mentioned those two camps, I think the businesses that were able to recognize how they could change quickly, and then there's the other camp of people who back in March 2020, they thought, Oh, we're right out the storm for a few weeks and wait for things to get back to normal, are maybe not fairing so well, and I think those differences are really starting to come to the forefront currently.

Rick Slark:

I think that mindset is really a crucial factor. And like you said, I think there was a group of people that just were going to wait it out. And some that weren't going to make any changes at all. And they got crushed, like you said, and the mindset that understood, there's nothing to go back to, the way that the future is going to be it's going to look so different than what it was that we're building almost a new business in many ways.

Nate Ward:

I would have to agree with that sentiment, that it was those companies that took the leap and realized that this was not going to be a short-term trend that they needed to respond to this. How can they bridge the gap if they were aligning on a middleman? How could they still deliver their product to their end consumers? Did they know who their end consumers was? And I think there was a whole industry that popped up to connect those suppliers, whatever it was, if it was food, if it was manufactured goods, whatever it was. But for those that were sitting on the sidelines expecting things to return to normal I'm sure they're wishing that they hadn't.

Tony Gallo:

Do you guys agree with the fact that I think a lot of businesses probably knew that they needed to do something different, they needed to pivot even before COVID hit, but that this just put it on fast forward and made them either sink or swim? I've heard it said that the five months is like five years, that everything was so condensed in what changed and how fast it changed that had COVID not hit a lot of the changes that we're experiencing right now would not have taken place for up to five years from now. So do you guys agree with that? Do you see that in the industries and the businesses that you're working with?

Nate Ward:

Yeah. Let me jump in here. So I think that there was a whole crop of entrepreneurs and budding businesses, or in some cases, product lines that were suited for this environment that were waiting in the wings and they were waiting for the right environment, that they were innovators that thought of a method of delivery that was safer. So let me give you an example. I just toured a company yesterday. It's a new client of mine and they do industrial vending machines. And so this is a way for distributors to stock goods inside a manufacturing plant in such a way that there's real-time delivery and things like that. And there're efficiencies to this, that companies don't have to pay a visit to see, Oh, how are the stocking levels doing? That they could get real-time feedback.

Nate Ward:

So there was a lot of efficiencies in place, but as soon as COVID hits and all of a sudden there is this need to separate people from one another and to take out the human element they've received unprecedented interest in their product line. So I think that this has provided a ripe environment for those entrepreneurs and those innovators that were sitting on the sidelines, then all of a sudden, this has been their time to shine. And they've been off to the races.

Rick Slark:

Totally agree. Some of the biggest businesses that we now know as everyday business, is started out of some kind of disruption like 2008, 2009.

Lisa Hutson:

Yeah, I agree. And I think that looking for those niches where a business can recognize and do some disruption and be able to act quickly and be very agile, are all keys to the businesses that we are seeing have some success now, even in some businesses such as retail and restaurants, there are some of those kinds of businesses that are still doing okay, because I think they were doing the right things before COVID hit, they really understood their customer. They understood their niche in the market. They knew their financial position, so it's amazing how many businesses don't really understand their true cost of goods. They don't control their costs in the most effective way. They don't really understand who their target client is and the value that they bring to them.

Lisa Hutson:

So some of those core concepts, I think when times are good businesses can get away with not knowing all that, and maybe they're successful in spite of themselves. But I think when a crisis hits, that's what separates the businesses who are really understand their business and are doing those right things and the ones that are flying by the seat of their pants. And I think this has really separated some of those companies.

Rick Slark:

Yeah. And one of the messages that I think is important for all of us and the SBDCs and the different business advisors is to keep in mind and to keep telling those businesses that this won't be the last disruption they experience. That there're disruptions in the economy and disruptions in trade, and all of that are probably going to happen even more frequently as we move forward. And they really need to develop a business that is as close as it could be to a disruption proof.

Lisa Hutson:

Right. And I think to have a plan for when disaster strikes, the one thing that we see, because whether it's the pandemic, which let's hope we don't see that again, but there's floods, there're fires, there're streets being shut down due to construction. And a lot of businesses had no disaster plan in place for any of those things. It's like all of a sudden our employees have to work from home. Do we even know where our files are? Do we even know if all of our employees have laptops? Just no plan in place, but whether it's this pandemic or something down the road to have some kind of disaster planning, I think companies have learned, even if you're a small business that you need to have those backup plans in place.

Tony Gallo:

As we're as we're recording this, we are seeing what is taking place in Texas. And I don't think those small businesses on top of COVID, they're dealing with ice and storms and weather and lack of electricity, lack of water, and it's been ongoing. So add everything that was wrong with COVID and then put that on top of it, and that's a pretty nasty sandwich to be dealing with, if you have no plans for what to do when disaster strikes.

Nate Ward:

Yeah. I was looking at a report that was recently issued by Euromonitor International, and they'd been tracking business trends in our country and around the world. And they asked them at the beginning of the pandemic, in the middle of pandemic and late last year, how are companies reacting to this? It's staggering to see how much the increase has been since the beginning of the pandemic back in April, let's say to the end of 2020. Around the beginning of pandemic, it was about 35% of the respondents said that they were considering contingency response plans. And that went up to almost 50% by the end of the year. So still not quite a majority of all companies that are thinking that they need to, or in a position to do it, but certainly urgency is really catching on with a lot of companies.

Tony Gallo:

So Nate, do you think that's because they just assume that once everybody gets vaccinated and once we get out of this shutdown mode, that everything's just going to go back to the way it was and that they'll catch up?

Nate Ward:

Yeah. I guess it's hard to say what they're thinking about. I think the question was asked in the spirit going beyond COVID about any type of disaster. My guess is that for a lot of companies maybe they just have bigger fish to fry that they're still perhaps looking for day-to-day survival, regardless of what the emergency is. But I do think that there is some clinging towards an optimism that we will return to some semblance of normalcy, or if not, things going back to the way they were, that at least we've balanced things out that we've experienced the worst of the effects of quarantine. And they've understood how to survive in this, the current state of things. And you can't imagine a further disruption on top of what we're already seeing.

Lisa Hutson:

Well, Nate, you work with primarily businesses that are involved in exporting. How have they been impacted maybe differently than some businesses that only sell in the United States and have you seen that exporting has been an asset for those businesses during COVID?

Nate Ward:

I do see this, it's really happened in a couple of phases. In the beginning phase it was supply chain disruption. A lot of the companies I work with depend on goods coming from abroad as a raw material. And so there were early disruptions, especially from Asia. Asia, I think has gotten a hold of that. And in fact, China and Japan for that matter have figured out COVID and their economies are doing very, very well right now, but in the beginning it was supply chain disruption. Then it was a matter of if you were part of that stream, where there was a demand for your product you were enjoying the full benefit and you were leaning into it. I've got a couple of really vivid examples that I can share with you, but for a lot of the companies, I would say it was a matter of just how can we survive?

Nate Ward:

How can we keep our heads above water? And most of the companies that I work with that were managed were able to survive that. But now we go into a third group of companies that have diversified to the point where even if there was a slowdown in demand in the U.S. market they were able to not only maintain, but even grow. So I'll give you an example. One of my clients they sell devices that are used in a special type of elective surgery. Then for the longest time in the United States, you couldn't have an elective surgery. It was just for COVID patients and essential operations only. But since they didn't have the same effect in Australia, for example, Australia didn't have the same trajectory, elective surgeries were still happening there. And so that was a strong market for them to continue getting revenue from. And they leaned on that to get them through some of the hard times early on. And that's exactly the kind of effect that we hope companies can enjoy. And a few of my clients have been able to benefit from that diversification.

Lisa Hutson:

That's great. And Nate, just for our audience to understand you don't necessarily only work with huge corporations, right? A lot of your companies are small to mid-size wouldn't you say.

Nate Ward:

Oh yeah. Hardly, I hardly work with any huge companies. I work with companies that are as small as five people, two people operations. I have a couple of clients that are in the single digits, but in general, most of the companies that I work with are 50 to maybe 150 employees in size. So they're hardly huge. They're mostly niche manufacturers, specialty companies, some they make fully assembled. I mentioned the industrial vending machine companies they sell finished product. There're many others sell a product that's like a component or it fits within something else.

Lisa Hutson:

Yeah. Because I think that's a misconception out there that you have to be a big company in order to export, but we have seen some of your successes with those small to mid-sized businesses. So just a plug that if you're a manufacturer out there and you haven't explored exporting, please reach out to your local SBDC and we can connect you to Nate and the Export Assistance Center. Or if you're outside of Ohio, there are probably Export Assistance Centers in most of the States.

Nate Ward:

I appreciate that, Lisa.

Lisa Hutson:

You're welcome. Nothing like shamelessly plugging. Right.

Nate:

I'll it anyway I can get it.

Lisa Hutson:

I think people are starting to feel with the vaccine coming out that maybe we are starting to be on the uptick of this. What kind of trends do you guys see that are going to stay around, or that have come to light in COVID that businesses really need, if they haven't jumped on the bandwagon, they need to get on that bandwagon pretty quickly?

Rick Slark:

Yeah. So what I am seeing is of course, digital, that's what we all know. Many businesses that we deal with don't even have a Google My Business page. And so they really need to work on their digital, the aspects of their business, because that trend is not going to go away, which is what we call gravity trend. It's a law of gravity it's going to happen. It's going to not only withdraw once pandemic is over, it's going to increase for sure. So that's really something I think you're going to see, pick up and delivery, I think is not going away. That's going to be something that is going to expand.

Rick Slark:

So what we now know as DoorDash, Grubhub, those kinds of things, they probably will not be players in the future of what's happening with delivery and pickup, but in the future, pretty near future, you will be able to get anything you want through a delivery type system. I mean anything, somebody asked me today on another, can I get a snowblower? Absolutely. You will be getting a snowblower, whatever you want. Will be just like we do with DoorDash now and food, it'll be in every industry you'll be able to do that.

Rick Slark:

The other thing I see is that the hygiene protocols are going to remain in place. People are going to be for a long time after this really, really careful. And restaurants, stores are going to have to make sure that they have these really visible hygiene protocols in place.

Lisa Hutson:

With the clients that we deal with, and a lot of them are our small main street type businesses. It's shocking how many in 2020 still did not have any real web presence, be it social media or the Google My Business page or a website. Although we have been telling clients for years, you have to have a web presence, how many really didn't and I just think it's not acceptable anymore for that to be the case.

Rick Slark:

Those businesses in the days to come, will cease to exist, unless they're a really niche and have a really loyal following.e things. For sure.

Lisa Hutson:

An example of what I really have seen we worked with a local retailer that sells women's accessories. And she had some Facebook following and a small website. And as soon as they shut down, she jumped on Facebook and started literally selling her wares on Facebook Lives every day. And she built a following and she had people who waited and watched for her every day on her Facebook Live and bought things to support her. And just got really creative with hosting private parties online for groups of women and just leveraged all those resources she already had in place in a more creative way. And she actually ended 2020 with higher sales than she had in 2019. So for a small retailer, that was a pretty phenomenal feat. But part of that success was because she had those few things in place already, and didn't wait for a crisis to start to implement those things.

Tony Gallo:

Do you guys both believe that we will see a Roaring Twenties, we will see an increase in doing business and in the economy and that when we rebound, we rebound big?

Nate Ward:

Yeah. I'll take the first stab at this. So I'll go back and I'll quote that same study that came from Euromonitor National and their respondents of... They surveyed about 3000 people. And they asked them, how is your short term impact of COVID going to be in revenue? And the overwhelming response was very pessimistic from the next month to the next six months. But when we look out to one year or beyond one year, the optimism rises sharply. I think I quoted to you that there was recently an interview by Dr. Nicholas Christakis from Yale University. He gave an interview to CNN talking about this idea of the Roaring Twenties and how we're going to see a return to that.

Nate Ward:

And after we've completely gone past the hangover effect of COVID and all its lasting health complications, that there's going to be this new found great enthusiasm, especially for travel leisure all the service industries. So the idea is that if you can weather this and if you can last that long, and he said that it might not start happening until the end of 2022 or 2023 if you could make it that long that you might be in for this golden age of this pent up hunger for being together, having social gatherings and so forth. I tend to agree with that. I think that might happen.

Rick Slark:

I think for a long time, we're going to be very, very cautious about being in large groups. Now, I will say this, there is a part of the population that will just go, and as soon as they can, will be going to concerts, going to doing all of the movie theaters, all of those kind of things. But I think there's going to be a huge number of people that are going to be extremely cautious for some time. I think it's a behavior that will be really interesting to watch and see how it develops.

Tony Gallo:

It'll interesting to see how the concert industry and the sports industry bounces back and deals with the fact that... I would love to talk to somebody who actually attended the Super Bowl, because it was supposed to be a cashless, touchless, Super Bowl where you couldn't bring cash, they couldn't take cash. And you didn't really... If you've ever been to a baseball game, you know, you order a beer and you're in the middle of the aisle, that beer is passed down to you by six different people that you don't know before it gets to you. So it's just going to be an interesting dynamic to see how you get people in, how you get people out and how you deal with them while they're there, even bathrooms.

Nate Ward:

I can only draw from my experience, I've traveled quite a bit. And I remember traveling in Asia and of course the East Asia in particular has had more experience. I'm no virologist, but this is just my personal experience. But there has always been more of a conscious recognition of how easily sickness can transfer from one person to the next. And they dealt with SARS and a few other illnesses. And of course, COVID, this version of COVID has come out of Asia too. But they were able to handle it much better because they learned from their past experience of how they need to keep separation and the cleanliness. And I think that this going to be a lasting memory. And I think all it's going to take is for there to be one report every now and again, of a cluster of infections popping up here and there for people to be reminded. But I think that we've learned some behaviors that are going to endure for quite a long time, if not for a generation.

Lisa Hutson:

Yeah. I agree. It's funny, I was listening to a couple of clothing designers talk and they were talking about how this movement from working not in the office has impacted fashion and fast fashion. Because let's face it when you're at home, your dogs don't care if you're wearing the same pair of sweat pants for the last three days. And so that demand for the latest trends is going and how is the fashion industry going to respond to that? And so you think about all the industries and the kind of impact it has will be changing. And even if we go back to the office, are we going to wear that suit jacket? I don't know. So it's going to impact a lot of different industries in a lot of different ways for a long time.

Tony Gallo:

Go to a corporate lunch, again, it's just all different. It's just going to be a different thing. I imagine even the fancy restaurants are probably not going to be the ones that survive. It's going to be ones that have either more comfort food or more delivery options. That kind of a thing too, just because if corporate's not paying for travel, I'm guessing they're not paying for big lunches either.

Nate Ward:

I tend to agree with that. I've got no crystal ball, but I think that sounds right to me.

Tony Gallo:

So do you guys see a big entrepreneurial growth at the end of all this where people want to be their own boss, they want to start their own business and move on from there?

Rick Slark:

No doubt about it. That was something that was happening at a really fast pace prior to COVID, that's just accelerated now. And I give an estimate that probably 75% of Americans will have some kind of side hustle or some kind of a home business, whether it's baking cookies and selling them at the coffee shop or whatever it is. I see a big rise in these mobile. When you... I forget what they call them now, Notaries. Right. Just something like that, just all of those kinds of things. It's amazing. That's one of the things I love about it is to see how smart and how intellectual and how these new entrepreneurial businesses are starting. It's amazing to me.

Lisa Hutson:

Yeah. We have definitely seen an uptick in people starting and you're right. I think that whole side hustle gig economy is going to continue to grow. We were seeing that trend coming up one because I think the younger generations are comfortable with that gig economy. But also I think there's just been a lot of need-based entrepreneurs. Let's face it if you lose your job and there's not a lot of prospects out there, one thing you can do is start your own business and control your own destiny. So we see a lot of those types of entrepreneurs starting right now. And I think there are certain niches... Anytime there's some kind of crisis definitely people see those opportunities of needs not being filled and the entrepreneurs that can recognize those and jump in there I think are going to really be successful.

Nate Ward:

I think that we have to recognize how many people lost their job during this pandemic and those jobs aren't coming back, or they're not coming back anytime soon. And people have had to move on that necessity has been the mother of invention for them, and they're having to find out. Working multiple jobs I'm sure they don't want to have to do this, but for those people who were in the thick of it that have the ability to, and the resources to start their own side hustle a job to spin it off into something bigger than that. I think there has to be people around them and also see what their friends or their loved ones are going through. And I can only imagine that that's motivating them to also want to charter their own destiny, to realize that, Hey, the job that I thought I was going to step into working at this hotel or wherever it was going to be, that job might not be there.

Nate Ward:

So I have to position myself differently. And the last part I'll add to this is I don't see there being an end in sight at least for a few years in terms of funding. I think that there's going to continue to be a flow of funds coming from the federal government in particular, to help bolster this and to make sure that the economic development agencies and all the other support systems that can allow this are going to remain going and churning up and encouraging that activity too.

Lisa Hutson:

With the clients we've worked with, we have really seen how positively some of that stimulus and support has come through, whether it's on the federal level, like the PPP or the SBA Economic Injury Disaster Loans, but even more so at the state level and the local level, how those grants and loan programs have really made a difference for the small businesses. And this has also brought to the forefront how you really see how it has impacted minority and the small businesses at a higher rate, a disproportionate rate than traditional white owned businesses. And I think putting a spotlight on those and the governments recognizing that has also helped some of these businesses to survive that otherwise wouldn't have lasted as long as they did.

Tony Gallo:

And I know it's not the same thing, but when you look back to the great depression, the Public Works Administration went on for 10 years. So what Nate said, I would almost see that this goes on for a period of time, just because it's going to be needed. It's still going to be needed to be propped up and worked with in order for us to get out of this fully.

Rick Slark:

Yeah. Just because this disruption ends doesn't mean the effects of it aren't still there and totally agree with that.

Tony Gallo:

I think that's a good place to end that really, if you guys have anything to add at the last minute or anything else to say, we'd love to have you wrap things up with the big bow on it right now.

Rick Slark:

Well, I was just going to say that, I think that some of the things that the small businesses are going to really have to think about in a real tactical way are things like touchless points of contact. I think those things are going to be really important. I think that just stepping up their digital game in any way that they possibly can it's going to be really important.

Nate Ward:

And for my part, I just want to say that representing the international business development side as a key way of companies to diversify and keep their businesses strong. I've seen a lot of strong signaling from the state to want to encourage that. And my prediction is that not only this year, but for the next couple of years, there's going to be a very, very strong push to make it as easy as possible, only expansion of services, expansion of grants and subsidies for companies to get into foreign markets. And for right now, it's been a golden age for us because everyone is home. Even in other foreign markets, we've been able to arrange lots of virtual meetings with prospective foreign buyers. It's been perhaps our busiest year ever in general, it's because everyone's home and we can set these meetings. So if you're listening to this and you've given it some thought for your business the time to act is now.

Lisa Hutson:

Yeah, that's great. And I'm just going to plug the Small Business Development Centers and that your local Chamber of Commerce's every state has them and they are a great resource for technical assistance. So if you're a business owner and you need maybe some guidance on whether, how you can leverage digital, or you need to implement some of these things or how you can jump on trends, check out your local Small Business Development Center or your local Chamber of Commerce. In most cases its services are at no cost or very low cost, and they can really just help you develop those plans and get you on the right track.

Tony Gallo:

Thanks Rick. Thanks Nate. We appreciate it. You guys being here today.

Lisa Hutson:

Yeah. Thank you guys.

Rick Slark:

My pleasure. Thanks.

Nate Ward:

I appreciate it.

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