How the startup mindset is saving small businesses

The pandemic and ensuing economic downturn are challenging small businesses to initiate significant changes to their daily operations. Even established businesses with decades of experience are throwing out their playbooks and embracing a startup mindset, one that is more agile, experimental, and quick to respond to market changes.

Connecting with customers in a new way

Michael Volpatt, owner of Big Bottom Market in Guerneville, Calif., shuttered his gourmet deli in mid-March for nearly two months. During that downtime, the chef and cookbook author launched "Cooking in Place" on Instagram TV and Facebook Live. He used these platforms to share recipes, and present cooking demos showcasing local ingredients and Big Bottom branded products, often pairing them with wines from the lush Russian River Valley.

The first episode attracted new online sales, and a quick switch from Etsy to Shopify brought more, as the business went from three to five orders per month to that many per day.

"My startup mentality kicked in to ensure our business survived," says Volpatt, who has since partnered with local wineries to supply lunches, cheese plates, and other products, such as his flagship biscuits and honey.

Business is down about 30% from a year ago, but Volpatt has positioned Big Bottom for a recovery.

"Those e-commerce sales starting paying for fixed expenses we still had even though we were closed," Volpatt says. "When things come back to normal, and we see foot traffic back, I will have these additional revenue streams."

Switching from in-store to online

Foot traffic at Best Watch Brands started declining in February, prompting the retailer to temporarily closed its two Tampa, Fla., locations amid the first wave of the outbreak.

The company initiated Zoom, Skype, and other video calls in March with prospective clients, allowing them to browse models and send inquiries from home or elsewhere virtually.

"Our online presence has completely replaced walk-in business for now," says co-founder Adam Wu.

The strategy helped boost revenue by 30% this year, while providing lessons learned in digital marketing and online advertising.

"This has helped us reach a far wider audience than we previously did before the pandemic when we focused almost exclusively on local customers," Wu says.

Save like a startup

In June, Luke Smith started looking for ways to trim costs with the frugality of a startup at his Louisville, Ky.-based company We Buy Property In Kentucky. He started outsourcing lower task functions, like cold calling, to a service provider in the Philippines, trimming monthly expenses at his real estate investment firm by $1,500 to $2,000.

He has since set aside nearly six months of reserve capital as seasonal demand wanes in the winter and general economic uncertainty creeps into the New Year amid record-setting COVID-19 infections and hospitalizations nationwide.

The reserves provide Smith peace of mind and certainty his business will survive a downturn.

"We just never know what can happen," he says. "COVID and this whole year have been a wake-up call."

According to Yelp's most recent economic impact report, nearly 164,000 businesses listed on its platform through August have closed since the beginning of the pandemic, a 23% jump since July 10.

A June report released by McKinsey and Co. projected between 1.4 million and 2.1 million small businesses could shutter due to the economic disruptions from the first four months of the pandemic alone.

Scrap it and start again

Alex Willen's dog boarding business wasn't able to survive the economic climate. Instead, he did what many startups do after a setback—he started over.

Willen, who left the software industry in Silicon Valley to pursue entrepreneurship and passion projects, lost nearly $100,000 in franchise fees, construction costs, and related expenses when he decided a six-figure, personal guaranteed loan was just too risky to take on to keep the business afloat.

He scrapped his business plan completely, and with some inspiration from his dogs, Cooper and Maple, he turned his homemade frozen treats for them into a new venture.

Cooper Treat's is boosting brand awareness by leveraging booth attendance at virtual dog charities and related events with a growing roster of social media influencers in the paw planet.

"The product is something people want [and] the unit economics are solid," says Willen, no stranger to the lean, startup mindset.

His San Diego home not only serves as headquarters but the company's manufacturing, marketing, sales, and distribution hub.