Co-founder of The Entrepreneurial Mind, serial entrepreneur and professor of entrepreneurship.
Author: Jeff Cornwall
Dr. Jeff Cornwall is the inaugural Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tenn. Dr. Cornwall's current research and teaching interests include entrepreneurial finance and entrepreneurial ethics.
Dr. Jeff Cornwall is the inaugural Jack C. Massey Chair in Entrepreneurship at Belmont University in Nashville, Tenn. Dr. Cornwall's current research and teaching interests include entrepreneurial finance and entrepreneurial ethics.
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
Apply for these loans directly from the SBA. You can apply for a disaster loan here.
Bridge Loans
The SBA offers bridge loans to businesses that have an existing relationship with the SBA to help provide quick cash until their disaster loan application gets processed.
Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
Perhaps the recession we are entering into should be called the “Mount St. Helens” Recession.
Mrs. C. suggested this to me on one of our walks this past week. When she said that the events surrounding the 1980 eruption reminded her of the current state of the world, I knew it was the perfect metaphor for our current and future economic conditions.
A History Lesson
Although us older folks remember the eruption of Mount St. Helens like it was yesterday, many of you were probably not around when this volcano erupted in Washington State forty years ago.
Scientists saw signs that Mount St. Helens was coming to life years before it erupted. However, concerns heightened in 1980 when the mountain’s activity created thousands of small earthquakes. Then the volcano began to change shape. The movement of magma upward created a huge bulge on the side of the mountain. As the mountain came to life, it spit out steam and ash. As the earthquakes and small eruptions intensified, experts predicted an eruption was imminent. They could not, however, predict the exact time and date.
On May 18, 1980, a massive earthquake from deep within Mount St. Helens caused a huge landslide on the north side of the mountain. The landslide was followed by a lateral eruption that sent gas, rock, and ash out at over 600 mph, devastating an area of 230 square miles.
The lateral eruption was unusual, so dozens of people who were observing the volcano or just waiting it out in an area they assumed was a safe distance were killed by the blast.
After salvaging much of the lumber leveled by the blast, officials decided to let nature take its course and heal the landscape. Over the coming years, vegetation grew back, animals returned, and the lakes and rivers that had been choked with mud and debris returned. For a detailed history of this event, see this link to The History Channel’s website.
The Lessons for Today
As evidence showed that an eruption of the volcano could happen at any time, people were warned or given precautions to take – some listened, some chose not to.
Just as the days, weeks, and years before Mount St. Helens erupted, we had signs that we might face a crisis. Epidemiologists warned of a possible pandemic. Economists insisted that the economic boom that we faced was becoming fragile and unsustainable. But just as with Mount St. Helens, nobody could have predicted when things would turn, nor the immediate devastation that would result.
The coronavirus pandemic seemed to come out of nowhere. We were living our lives, planning for our spring breaks, starting new businesses, getting ready for new careers, and then suddenly everything catastrophically changed in what seemed like an instant.
The landscape after the eruption of the volcano looked like a moonscape. How could it ever return to normal after such devastation?
And yet, it did return. Not exactly like it was before, but it did return to a thriving ecosystem, and much more quickly that many experts predicted. It showed the resiliency of nature.
If we let things take their natural course, our society and economy will come back. Not quite like before. Hopefully, through all of us working together, it will be a bit better. Consumers will begin to spend again. Small businesses will start back up. Entrepreneurs will find new opportunities in the ashes of this recession.
A Note of Caution
One of the lessons of Mount St. Helens is that something like its 1980 eruption will come again, if not on that mountain, on one of the string of volcanoes that make up the part of the ring of fire circling the Pacific Ocean that cuts across the Western US. It may not come for many decades or even centuries, but it will happen again.
My parents and grandparents never forgot the lessons of the Great Depression. They tried to pass them along, but over the generations, memories faded. None of us alive today will ever forget these challenging times. But to our grandchildren and grandchildren’s children, the events of 2020 will just be a vague part of history.
Let the wafts of steam that still come out of Mount St. Helen today act as a warning: sometime in the future, generations to come will also face devastating events in their lives.
Managing the message has never more critical than the times we are now facing.
In this interview, Raminta Lilaitė, co-founder of Blue Oceans PR, offers her insights on managing the message as it relates to the current crises both internally to your staff, and externally to your customers and other stakeholders. Blue Oceans PR is a firm that offers support in global PR, Digital Marketing and Communications, with specific expertise in crisis management.
EM: How much information should business owners share with their staff? Is now a time to be guarded or transparent?
RL: When a crisis begins, employees need to understand how it will affect their work and the company itself, so it’s the time to be as open as possible. It is important to appoint a person or a team which will be responsible for sharing the information with employees. Staff should receive all mandatory information regarding the critical points and risks of a crisis, how to ensure a safe and responsible environment and how the work will look like from this point.
EM: What are the key steps to communicate with customers in a way that will ensure they stay with you when we all make to the other side of this crisis?
RL: Do not stop fostering relationships with clients, partners and investors. Use various communication channels, such as social networks, just to chat and show that you are responding to the situation. Clients need to understand that in spite of temporary troubles, the company is still in business and you are ready to help and answer any questions. The communication should take place regularly and be available at all times. It is important to stay open about the challenges ahead and how you are prepared to deal with them. Crisis can be a great time to re-communicate your company’s core values.
EM: Most small business owners have never been through anything even close to this crisis. What are the key mistakes to avoid when communicating with employees, investors, customers and the general public?
RL: Do not ignore the problem. A pandemic will inevitably affect your company and employees, thus talking about security and any foreseen plans during quarantine with clients, employees and partners should be a priority. Everybody needs to know clearly what your business plans are, whether the team will now work remotely or you will temporarily be out of business, how you can be contacted and how you are willing to help the others. This will allow the company to maintain seamless communication and provide clarity in shaping future communications.
Offer your expert advice to the press. While the first instinct in a crisis is to get away from it all, long-built communication efforts should not be suddenly dropped. Do not push the press away – continue talking about your company by fine-tuning your tone, as people need empathy and sensitivity at this moment. A good way to help is by actively offering your comments and company expertise. For example, if you are a virtual educator, offer tips on what to do with children at home, and if you are a private clinic, share insights on health care, etc.
EM: Any other advice?
RL: Give back to your community. There probably are people around you who need help – take a chance to find ways to contribute safely. Perhaps you can provide food aid to those who have returned from abroad and are in compulsory two-week self-isolation, or assist elderly people struggling to get the essentials – there are many safe opportunities to contribute to the community. Do good deeds and communicate about them, and it will encourage others to join in as much as they can.
America has raised two successive generations trapped in linear thinking.
I see it year after year as students get ready to enter the world of work. Many of the young people view their careers through the lens of linear thinking.
The Linear Career Path
Students come to me for both formal and informal advice. Their career decisions leave many stressed, and even emotionally paralyzed.
They have to get into the right school. They have to get the right professors. They have to land the perfect internship. They have to land a dream job that feeds their passion. Step after step, they are convinced that one wrong move jeopardizes their future. They are convinced that each step along the path predetermines the eventual outcome of their careers. One misstep leads to a dead end, from which they can never come back. They have methodically followed the “one path” in life that they believe will lead them to success once they enter the work world. However, when they reach the point in life when they enter that “real world”, the nice clean path they thought would be waiting for them is not there. No wonder so many students move back home to “figure out life” after college!
The Un-coachable Entrepreneur
Many aspiring entrepreneurs we work with also have this same mentality. They identify the one business that will bring them fulfillment and feed their passion. They accept no feedback from mentors, professors, or even customers that challenges their thinking. They have “figured it out,” so they expect all to get out of their way and let them forge ahead. Customer discovery, market research, advice from experts be damned!
They are what my good friend and mentor-extraordinaire Shawn Glinter calls the un-coachable.
Don’t get me wrong. There have always been un-coachable entrepreneurs, at least during the four decades I’ve been working with entrepreneurs. What is different is how many more we are seeing. They suffer from the same generational affliction of linear thinking as many of the students I work with.
Time for New Approach to Thinking
And now we face unprecedented economic and social disruption from coronavirus. Linear thinking no longer will work for life plans nor business plans.
Phil Lewis wrote an excellent piece a couple of days ago about the critical need for lateral thinking. Lateral thinking is coming up with novel, even non-logical, solutions to a problem. It is creativity at its best.
The critical point is this: it does not matter a jot what you do or where you work. Everyone has it in them to add transformational value through lateral thinking—even, or especially, in times of change or crisis.
Small business owners and entrepreneurs are facing personal crises within the broader context of the coronavirus crisis. The ones whose businesses have the best chance to survive, and eventually thrive, are the ones who can become nimble, lateral thinkers.
Nothing we have learned in the past can prepare us for what is next. Entrepreneurs, particularly young entrepreneurs, must break free from their habit of linear thinking and find new solutions to the new problems this transformation we are living through has created.
These new problems are coming fast and furious. There is no time for a contemplative approach to business planning and business modeling.
Experiment often. Fail quickly. Find traction. God speed!
What I am hearing in the texts, emails, and calls I am getting from entrepreneurs is resolve. They are determined to get through all of this, by doing whatever it takes. These entrepreneurs have the resolve to learn from what we are going through. They are committed to becoming even stronger on the other side of this chaos.
Countless Stories of Resolve
One of my alums, who is a tech consultant, texted me yesterday. He told me that, in one single day, they lost all of their anchor clients. His next comment? He said that it is an important lesson in managing risk that he wants to share with others going forward. Resolve.
I have several alumni entrepreneurs (and several friends) who own businesses tied to the music industry. One of them emailed me to let me know that all of her planned activities tied to live concerts were indefinitely suspended. She went on to tell me that she is pivoting her business model. She is building her platform to help keep artists and fans connected during this time of cancelled concerts. Resolve.
Another alum told me they were temporarily closing down their operations, which are in multiple cities across the country. His next sentence was an offer to help Mrs. C. and I if we need anything. Resolve.
Countless restaurateurs who I know are scrambling to sell gift cards, build up their take out business, or deliver prepared meals as a new service for their customers until they can open again. Customers are doing what they can to support these small business owners. Resolve.
An alum whose business is tied to live speaking events (all cancelled for next several weeks) encourages all of us to take what comes next “one day and one step at a time.” Resolve.
We’ve Seen This Before
In looking through past posts at this blog, it surprised me to see how many have been about recessions. I guess that happens when you’ve been blogging for 16 years. In the early days of this blog, back in the early 2000s, I found several posts that lauded the entrepreneurs’ critical role in the expansion that had followed the 2001 recession. This recession came on the heels of the dot.com bubble bursting and 9/11.
Entrepreneurs led the recovery after the 2008 real estate collapse. A post that stood out was one based on a talk I heard from venture capitalist Tim Draper, who founded the firm now known as Threshold. I wrote in that 2009 post:
The genesis of the tech boom of the past decades began during the recession of the early 1980s. Microsoft was born during the recession of 1974. Semi-conductors first came to market in the recession of 1957. Even during the Great Depression we saw the founding of Hewlett Packard, Texas Instruments and United Technologies. He assured us that “innovation is relentless.”
Draper predicted we would see “pilotless electric cars, e-education for the masses, all computing from the clouds, genetic disease prediction.” These and many other innovations Draper foresaw have all come to be over the past decade.
We know that it is the creative destruction and innovation from entrepreneurs that creates real economic growth. Schumpeter helped us rethink the role of entrepreneurs in our economy almost eighty years ago. He helped bring entrepreneurs out of the shadows of economic theory.
My Own Journey
In reflecting about all that we are going through, I have been remembering the challenges in my own journey. I prepared a couple of slides to share with my students. They will get this presentation this weekend online, since that is how we will be meeting for the rest of the semester (which would have been almost impossible a decade ago).
The first slide highlights the five major economic downturns that I have experienced in my work life prior to the one we are about to experience. The downturns are shaded in grey, and the events surrounding each are in red.
And yet, life goes on.
This slide shows how Mrs. C. and I continued to move ahead with our lives during all of these ups and downs.
After the back-to-back recessions in the 1970s we went to college. We saw a better life ahead of us if we pursued a college education. During and after the severe double dip recession in the late 1970s and early 1980s, we got married, I went to grad school, we started having a family, and we bought our first house (with a double-digit interest rate mortgage). The 1991 downturn came at the same time we were raising money to expand our healthcare business. After the 2001 market crash and 9/11 we sent our kids to college. The events in our lives around the 2008 recession involved the next generation in our family — marriage, grandchildren, homeownership, and business startups.
The resolve we are seeing among entrepreneurs will pay off for our economic future. It will take time and hard work, but these entrepreneurs are the ones who will lead us into our next economic expansion….and we will have one!
Kabbage Inc., which helps small businesses with working capital funding, earlier this week launched www.helpsmallbusiness.com. The model is simple, yet potentially powerful, enabling anyone to purchase an online gift certificate from participating small businesses.
Cash Now
The initiative is a way to provide a quick solution for small businesses that seek cash flow. Customers are able to redeem certificates in full after they’re issued or in the future when the crisis has subsided. Kabbage deposits all revenue generated from gift certificate sales via Kabbage Payments as soon as the next business day to participating small businesses.
Participation is Easy
In minutes, any U.S. small business can sign up for free on www.helpsmallbusiness.com to immediately seek financial support through gift certificate purchases from individuals throughout the U.S. Kabbage will also provide businesses a unique URL to easily share their personalized page with customers via text, email, web, social media or print. Consumers can purchase multiple certificates for any amount between $15 and $500. Once customers purchase certificates, Kabbage immediately notifies the small businesses, which can use free technology offered by Kabbage to scan, verify, track and fulfill gift certificates when redeemed.
Together We Stand
“The impact of COVD-19 on small businesses requires the support of a nation,” said Kabbage co-founder and CEO Rob Frohwein. “If there is a local small business that you love, they need your patronage now more than ever. Many businesses are closing and others are seeing reduced demand. The site is a means for the millions of small businesses that employ more than half of all employees in America to continue making sales and to feel your commitment to their long-term success.”
“We encourage everyone to think beyond consumer goods and consider all service providers such as local handymen, lawn care providers, dry cleaners and laundromats; they all need our support,” said Kabbage co-founder and President Kathryn Petralia. “Many weddings, birthdays and vacations are being postponed due to social distancing. Think about the small businesses you would have approached for those activities and purchase certificates to plan for future dates.”
What’s in it for Kabbage?
Kabbage will not profit from its efforts to support small businesses. Kabbage is actively working with organizations in the payments ecosystem to eliminate or significantly reduce any associated transaction fees. Kabbage’s goal is to provide small businesses with a unique solution to generate revenue during this extraordinary time.
Owners of growing small businesses are facing unprecedented challenges due to the coronavirus.
Amplify, founded by Belmont University alum Ben Cooper, connects growing small businesses with a team of outsourced COOs. In the midst of the coronavirus outbreak, Amplify is offering two programs to help small business owners.
Amplify is blocking out 30 minute time slots to help e-com business owners think through and get a fundamental strategy in place for the coming weeks and months (link here)
Ben is a bright guy and someone you can trust. I highly recommend anything he has to offer.
When our world was turned upside down by the coronavirus, my mind quickly began racing through my mental rolodex, wondering how everyone is doing. Certainly my immediate concerns were for family and friends, especially those with health concerns. Soon my web of worries shifted to all of the entrepreneurs I know — students, alumni, and friends. I began a steady campaign of reaching out. First to friends and family. Next to my alumni entrepreneurs.
What I heard from my alumni entrepreneurs was particularly heartwarming and encouraging.
Entrepreneur’s Response
First, those with employees expressed how important it is to find ways to help their staff. We are seeing story after story of business owners doing what they can to lessen the blow to their employees. Locally, we are seeing country stars do what they can to help the employees of their bars and restaurants on Lower Broadway in downtown Nashville. Dierks Bentley and Florida Georgia Line both committed to give each of their employees $1,000 to help them make it through the time while his Nashville bar. Between the two establishments, this is over 200 employees. John Rich has committed to keep paying his bar workers during the shutdown. I am hearing the same commitment from several of my alumni entrepreneurs.
Second, I heard a consistent message of doing what it takes to “make it to the other side” of this crisis. Reports from places like South Korea, which is several weeks ahead of the US in its outbreak, talk about a slow return to business. This is encouraging, and supports those who predict we might see the beginning of a turnaround by early to mid summer. The entrepreneurs I talk to are shoring up cash flow and making cash budgets that can see them through to June or July, even with little or no revenues. These are often tough and austere plans, but they are doing what they must to keep their businesses alive.
Finally, I am hearing the indomitable entrepreneurial spirit in their responses. They are worried, and even scared, but they are also showing hope and resiliency. They inspired me. Facing much more dire circumstances than I am right now, their optimism and courage reminds me that it will be our entrepreneurs who lead us out of this. It may seem like a long, dark tunnel, but there is a light at the other side where things will improve.
The Other Side
I do want to offer a note of caution, however. When we do get to the other side, and we will, it will look very different than the side we left. Entrepreneurs will be tested to adapt to a new reality. A shock to our economy, to our society, and to our culture as we are now experiencing right now will fundamentally change many aspects of our lives. Entrepreneurs will need to be ready not only to survive during this short-term period, but to adapt over the long-term, probably like never before. The other side will present a myriad of both amazing opportunities and significant threats.
Be ready to be more entrepreneurial than you ever have been before, and you will be alright when we get to the other side of this crisis.
