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How Difficult Is It to Start a Business during the Pandemic?

How Difficult Is It to Start a Business during the Pandemic?


By Dr. William Oliver Hedgepeth
Faculty Member, Transportation and Logistics Management, American Public University

Before the 2020 coronavirus pandemic practically shut down the U.S. economy, the challenges of starting a business included poor leadership, weak team member communications or behavior, budgets, expenses, and a changing business world.

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These challenges are still here and will be into 2021 and perhaps beyond; indeed, the expectations for long-term growth and five-year plans are not valid right now. They were based on the past 10 or 20 years of history, growth, and successes in business by following a standard business model.

But that model has been broken for the time being. The issue is for how long? The COVID-19 crisis seems to have highlighted or focused on at least six new risk factors. These six risk factors for 2020 are:

  • Cash flow
  • Supply chain shut down
  • Closure or disruption
  • Layoffs or workers working remotely
  • Cybersecurity from workers using home computers for business
  • Legal issues for not meeting contract agreements with customers or suppliers

Retail may continue to evolve into a new normal for several years. Some experts are hoping for a new normal to return in 2021 or 2022. Adding to this is a CoreSight Research estimate that more than 25,000 retail stores will shutter their doors in 2020.

In addition, an eMarketer forecast predicts that retail sales will drop by 10% by the end of 2020 and remain low until 2022. The Congressional Budget Office forecasts that the unemployment rate, which is about 10% now, is expected to be around 7% in 2022 and 6% by 2025.

“We expect that a return to pre-crisis levels in offline discretionary retail sales overall will be gradual, as we expect consumer confidence, demand and spending to be short of normal for some time,” Coresight founder and CEO Deborah Weinswig said.

The COVID-19 Pandemic Has Spurred a Growth in Technology

This COVID-19 pandemic has spurred a growth in technology, everything from robots to artificial intelligence (AI) applications, to logistics, manufacturing, and the security of workers and machines.

What was once an incremental improvement in worker tools and standard operating procedures has been accelerated in innovation and development time. At the same time, there is a rapidly growing gap in the time when normal jobs will be available when this pandemic is over in two to five years.

This phenomenon is adding to existing and new jobs, as well as eliminating some other jobs. Robots and AI are replacing some very typical jobs such as vehicle drivers and all sorts of manufacturing jobs such as warehouse logistics’ movement of goods.

One area experiencing growth now and over the next five years is robotic assistance in the retail grocery industry. Also, robotic and AI systems are already part of many banking systems, processing credit risk and customer loan requests. Banks are using AI technology to provide improved customer service as well.

AI has become part of the automation of many manufacturing, logistics and retail operations. Older “line jobs” are being eliminated, but there is also some opportunity in new jobs with employees working side by side with smart AI or robotic systems.

The Rise of Wearables in Warehouse Management

Many warehouse workers are equipped with hands-free wearables connected to the internet. These devices are delivering data so workers can hear or see information so they can decide on actions to take. Workers using this technology are most likely doing their job better and faster.

By 2023, it is expected that wearables will be used by 70% of warehouse logistics operations personnel. Along with robots moving packages and pallets and AI technology directing the flow of labor and packages, wearable technology is becoming commonplace.

What are some of the many ways wearables are used? The list is long and growing: order picking, routing, tracking, expediting, exception handling, high-value asset handling and monitoring, receiving, cycle counting, sales data collecting, orders, sales forecasting, field service installations, repair and maintenance, monitoring, recalls, inventory management, near-real time replenishment, and compliance.

Some Jobs Have Been Lost for the Short Term, But the Need Remains for Workers with Trade Skills

During this pandemic, some jobs have been lost for the short term of two to five years. Cleaning crews are losing their jobs at hotels and offices. Likewise, security crews and companies seem to be experiencing a decline in clients and therefore employees.

And for sure, restaurant staffs have been drastically reduced, because thousands of restaurants have closed and won’t be coming back in 2021 or maybe ever. Those supply chain or logistics companies that supply the food and beverages to restaurants have lost customer contracts.

However, there is still a need for people with trade skills such as welding, carpentry, plumbing and auto mechanics. Indeed, some business opportunities are opening for 2021, despite the current pandemic. You do not need a four-year college degree for many emerging job opportunities, such as nurse technician, long-term health care provider for our aging population, or certificate jobs in criminal justice, corrections, or security services.

If You Are Thinking of Starting a Small Business at Home, Examine Your Talents Carefully

Can you start a small business from home during this pandemic? Look at yourself carefully; look at the talents or hobbies you have but might be ignoring. Do you have a talent for accounting or keeping the books for your own family in order? Then explore becoming a tax preparer for a company or just go out on your own and start a family or business tax preparation business.

Each of us has some unique skills. Explore them and get ready to reach out to the world over the internet, Facebook, Twitter or other online media. Since virtually everyone is quarantined in this current situation, there is a ready-made audience for your skills, talents and products.

If you do start a business at home, there is the real concept of how to determine profit. You will need to keep detailed listings of all of the items needed to make your product and sell it. Before you start or if you have already started selling your work online, stop and review that list again of what you used to create that item.

One method is to make a journal or diary entry in your notebook of what you do each day with regard to the costs and items used to make your product and move that product to the delivery service, such as the post office or other package carrier.

But remember that starting a home-based business is not just picking up your computer and logging in. There are also legal issues to explore. What kind of business license do you need? You may have to spend a few dollars to become legal in your county, city or state. And if you sell things out of state, there are other conditions as well.

A big part of all this simple advice is having a detailed business plan. You must be able to write down what you plan to do and who is going to purchase your item or products. That means doing a lot of market research. This can be done online by searching who is already selling that same item. This leads to your financial plan, and you may need to go to a bank to seek some advice and a loan. They will be looking for such detailed thinking, especially in these pandemic times.

About the Author            

Dr. Oliver Hedgepeth is a full-time professor at American Public University (APU). He was program director of three academic programs: Reverse Logistics Management, Transportation and Logistics Management and Government Contracting. He was Chair of the Logistics Department at the University of Alaska Anchorage. Dr. Hedgepeth was the founding Director of the Army’s Artificial Intelligence Center for Logistics from 1985 to 1990, Fort Lee, Virginia.



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