Can a startup mentality save small businesses in the coronavirus era?
In early February, things were looking good for Practice San Francisco, a center offering individual psychotherapy and classes for children and adults that promote physical and mental wellbeing. Business was so good that owner Nina Kaiser, a psychologist, had just renovated and moved into a bigger space with the goal of doubling revenue.
Then the coronavirus pandemic hit. In early March, Kaiser moved all her classes and counseling services online. Fairly quickly, however, video fatigue set in.
“After a few weeks, we saw a big downturn in attendance across all our programs, even psychotherapy,” she said. Thus began a period of “endless pivoting and troubleshooting.”
Like many other small businesses, Practice San Francisco, which has been around for three years, has essentially become a
startup again, employing a strategy similar to the “fail fast” approach well known in startup culture: A change is made to some aspect of the business and if it works, it sticks, but if it fails, data is collected and something else is tried.
“There has been a lot of flying by the seat of your pants,” Kaiser said. “We see what doesn’t work, where we run into trouble, and we course-correct. It’s this constant, iterative process.”
That process is crucial for small businesses, whose numbers dropped by 22% — 3.3 million — between February and April, according to the National Bureau of Economic Research.
With Practice San Francisco’s classes being delivered remotely, Kaiser partnered with a local yoga studio to offer joint programming, increasing both businesses’ visibility and revenue.
“It wound up being more difficult than I anticipated to combine two communities with different expectations,” she said. Enter the fail-fast approach: The collaboration has been paused and is being reconfigured.
After that, Kaiser decided to change her class model from drop-in to seriesbased, keeping a cohort of students together for an entire series. “That builds relationships within the class,” she said. “We are now intentionally focused on building community.”
Attendance went from one or two people per class to between eight and 15. And once it became clear the pandemic would not be short, demand for remote psychotherapy began increasing. Despite the pandemic-related challenges, Kaiser projects that 2020 revenue will be up 50%.
The Greater Knead, a gluten- and- allergen- free bagel company in Bensalem, Pennsylvania, also was poised for a good year in 2020. The 8-year-old company, whose bagels are sold in bagel shops and supermarkets, had finally turned a profit, with just under $1 million in revenue. In February, sales were up 20%, and the business was on track to have its best year yet, said owner Michelle Carfagno.
But in early March, sales dropped steeply, as stores closed and customers stayed home. Supermarkets began running out of Greater Knead bagels and didn’t reorder, focused instead on stocking items like toilet paper and cleaning supplies. By May, revenue was down 60%. A small bright spot, however, was internet sales, which were slowly increasing. Carfagno decided to capitalize on that and invested in social media advertising, something she had not done before, to drive traffic to her website. Now that people were staying home, they were seeking Greater Knead’s bagels online, and she wanted to make sure they could find them.
Soon after, Carfagno decided to work with a West Coast fulfillment center, enabling her to ship nationwide. By September, online sales were up 250%.
“We now see this as an opportunity to have a direct relationship with customers,” Carfagno said.
A nt hony C a sa lena , founder and chief executive of Squarespace, a website building and hosting company with more than 2.5 million customers, the majority of which are small businesses, sees an increasing willingness among these businesses to try new strategies, including fostering a more direct online relationship with their customers.
“Companies creating new websites on our platform, and email marketing campaigns, are at an all-time high,” he said. “And e-commerce sales on our platform have doubled.”