We are in a storm and heroes are stepping forward by the minute. They are the brave men and women who are taking care of the sick and keeping us safe during the COVID-19 pandemic.
There are also lesser known heroes at work. They are the small business owners who are up at 2 a.m. trying to figure out how to make payroll next week.
In times of crisis and confusion, it’s a lack of clarity and failure to act that kills, literally and economically.
During the Great Recession, the No. 1 lesson we learned from our work with companies was the damage a lack of decisiveness can do. The companies that reacted quickly were the ones that survived.
When it comes to cutting costs, no one wants to do it and it is gut-wrenching. When there just isn’t enough revenue to cover expenses, the math is brutal but undeniable. You either cut now, preserve the business with some people laid off, or you cut later after all your cash is gone — and the business is gone with everyone laid off.
The first priority is to bring in the revenue and save everyone’s job. Herculean efforts should be made to find the dollars to cover costs and keep people working. Brainstorm sessions should be had. Creative ideas should be hashed. War rooms convened.
And while you’re at it, take exquisite care of your existing customers so they are least likely to cut you.
Panic is not helpful. Toss what you can’t control. Be laser focused on the task at hand with the understanding that everyone is rowing in the same direction in the fight for their livelihoods.
So here’s the clarity to combat the confusion:
Shore Up Losses
Start with the attitude that you can’t lose money. You can’t count on things to turn around next month. Businesses fail running on wishful thinking. Pull out your financials and the spreadsheets and come up with a plan to cut costs. Don’t be afraid to reach out for help.
Look Into SBA Programs
The Small Business Association offers some good assistance programs. First is the SBA’s Economic Injury Assistance Loan program. You apply for that directly with the SBA. The second is a provision contained in the new CARES Act, a modification to the SBA’s 7(a) loan program called the Payroll Protection Program (PPP). This is run through 1,800 local banks across the country. Get an application at Home.Treasury.gov/cares. Check with your banker to confirm they are a participating bank and send it to them as soon as possible.These two programs have unique features and provisions you should understand. For example, the PPP loans can be forgiven under certain circumstances.
There are other small business assistance programs, such as the payroll tax credit, to look into while others are still being rolled out.
If you have questions or need help with the SBA programs, reach out to your accountant or give me a call. Everyone involved, including the SBA and the bankers are still hammering all of this out. There are no fees to apply and there are no prepayment penalties. Each application should take you less than 30 minutes to complete.
Care for Employees
Naturally you are concerned about the well-being of your employees if they get laid off. In addition to the PPP, the CARES Act contains a good provision focused on workers. Basically, it is unemployment insurance on steroids, allowing most workers to maintain their income levels. If you are faced with the difficult decision to lay off any of your staff, familiarize yourself with how unemployment works and be prepared to walk through this with them.
I’ve talked to too many companies the past two weeks who are burning cash by the day. You must have the attitude that this is serious, and you will need every dollar before it all passes. Focus on the big expense items first and act.
During the Great Recession I was moved working alongside our many small business clients. It’s cliché, but I really did see what makes America great. It’s American ingenuity in high gear; our capacity to roll up our sleeves and do things that haven’t been conceived of before; our capacity to awaken, rally and fight to win.
It’s what I’ve learned about our heroes, and it leaves me with no doubt that we will make it through this.