At the onset of the pandemic, it was clear which businesses would have the upper hand and be most likely to survive – it was those who had well-established and ingrained relationships within their pipeline, distribution or infrastructure.
Much like we’ve heard about herd immunity with regard to the pandemic, economic herd immunity is a cooperative business model where businesses work together to protect each other. Like a subterranean tunnel built to keep transportation flowing regardless of the traffic or troubles that wreak havoc above, economic herd immunity means having a matrix of suppliers, vendors, facilities, reliable technology and well-trained staff as a connected lifeline that keeps your business moving.
As a lawyer working with many entrepreneurs in everything from construction to technology to consumer goods, I’ve frequently explained economic herd immunity to clients and have seen how it resonates with founders and small to mid-sized businesses at any stage.
A perfect example was a situation with a food manufacturer who had horrific logistic issues at the height of the pandemic, unable to get anything anywhere. Produce was literally rotting on docks. The end users got together and figured out a way to form temporary logistics hubs to keep their companies going. Economic herd immunity means coming together to address challenges, strengthen ties and be ready no matter what hits the fan.
Relationships always matter
Leveraging established partnerships and working in conjunction with your customers, vendors, suppliers and your employees, gives you a chance – as a group – to be able to survive the possible downtrends in our economy.
For economic herd immunity, the idea is that people and companies within a marketplace or industry line work together to bolster each other’s businesses. For example, a manufacturer relies on a supplier. If the supplier can commit to getting the product to the manufacturer, then the manufacturer can produce the product and earn the revenue to pay the supplier. With commitments in place, the manufacturer and supplier can partner to ensure there is a pipeline, and with some patience when it comes to logistics, you have a chance as a group to continue moving forward.
Communicate, yes, even the bad stuff
Inherently, people and businesses want to stay in business. The way in which to get through a pandemic or any difficult time (and believe me, something will happen) is to be more open. Talk about situations, contact your banks, advisors, lawyers and investors to figure out who is going to be your partner in business – inside and out.
If you communicate well, explain your needs and allow your partners and constituents to be able to plan themselves – perhaps addressing the very challenges you’re experiencing – then you’ll be in a position to potentially leapfrog over your competitors as the economy bounces back.
Keep looking up from the foxhole
We’ve seen a lot of talk in the past few months about how small and medium- sized businesses are struggling because, by their nature, they go into “hunker-down mode” and tighten their reins. They stay quiet, perhaps slash their expenses and employee base, and are not thinking about how to grow, adapt or work with others in their sector.
Do not hunker down too low or for too long. Keep one foot in the trench, but be sure to look up out of the foxhole to figure out the lay of the land. What are others doing? What do your customers need most? How can you stay relevant? Distilleries making hand sanitizer. Curbside pickups. Telehealth and tele-everything. With the right advisors and a plan, economic herd immunity can help you make it through.
Flashlights highlight weaknesses
When you look up out of that foxhole, keep your head on a swivel and notice what’s not working. The pandemic brought with it an extra bright flashlight, exposing weaknesses in individual businesses and industries. It is always the right time to shore up supply and distribution chains. Upgrade technology. Train your employees. Looking for investors? Want to sell your business? There will always be someone shining a flashlight on your business. Make sure they like what they see. Utilize your relationships and the strong team around you to bolster your business model and make it shine.
Entrepreneurs are quite possibly the best prepared for a pandemic or any seismic event – that underlying tenacity and willingness to roll up one’s sleeves is exactly the mentality it takes to pivot, flex, adapt and persevere. With economic herd immunity, startups become stronger, and the potential for success is even greater.
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George Nemphos and Tim Braue started Nemphos Braue LLC in 2016, combining big firm expertise with the flexibility and creativity of a boutique practice. From venture capital and private equity to intellectual property, mergers and acquisitions and general corporate counsel, Nemphos Braue is a different kind of law firm. www.nemphosbraue.com
