Weathering the COVID-19 storm: Tips for small business owners
As the COVID-19 outbreak continues across the globe, small businesses are struggling with its impact. According to a survey by Goldman Sachs, 75% of small business owners said their business has already been impacted by fewer sales, with 51% indicating they will only be able to continue to operate for 0-3 months.
“COVID-19 and the variable of the unknown ending has created much upheaval,” said Seyi Falade, Vice President of Gainesville-based Cornerstone Barricades. “Confirmed contracts have been postponed. Current projects are paused. The ability to plan for the future based on current work and upcoming work is gone.”
Like many business owners, Falade is having to make tough decisions more and more often.
“As I find myself running scenarios, ‘What if only 60% outstanding invoices are paid, how would we operate?’ I am prioritizing our obligations and payroll is at the very top,” she said. “With the decrease in activity, I cannot keep everyone working. It’s just a hard reality and my employees are nervous. The folks on the Crew Team (hourly laborers) are asking for updates regarding hours. I do the best that I can with the work that we have.”
With businesses like Falade’s left in the lurch about where they’ll find the money to pay for things like rent, utilities and payroll in the short term, governments at all levels are scrambling to provide aid.
Federal and state governments are the first places small business owners can look to for help, said Jamie Kraft, Warrington’s Entrepreneurship & Innovation Center Director.
“There are a number of bailout packages passed at the federal level, most recently the Coronavirus Aid, Relief and Economic Security Act, offering loans and disaster assistance to small businesses directly or through the U.S. Small Business Administration (SBA),” Kraft said. “These are low-interest loans of varying degrees with a number of restrictions regarding qualification and payback. Most importantly, the goal is to provide short-term relief for businesses and help them to keep their employees, make payroll, and cover rent, utilities, etc. In addition, the IRS has deferred tax payments for 90 days.”
For the state of Florida, Kraft also mentioned small business owners can apply for short-term loans through the Florida Small Business Emergency Bridge Program. While this relief is a step in the right direction, Kraft notes that additional relief will likely be needed.
If a small business does need to apply for aid, Kraft suggests starting the process sooner rather than later.
“With the inordinate number of requests at the scale we’re going to see, there’s a significant worry that it may take way too long [to receive aid],” he said.
Resources are also available to small business owners at the local level. Kraft said that businesses are looking to each other for support, as well as customers for any help that might be available. Local chambers of commerce are also providing businesses with information and resources they offer.
For businesses in Gainesville, the Greater Gainesville Chamber is sending daily updates to local resources and support to keep everyone informed and connected, Kraft noted. Small business owners outside of Gainesville can find a list of accredited chambers of commerce on the United States Chamber of Commerce website.
For businesses looking for additional insights on strategies they can follow in the short and long-term, Kraft and Falade offered the following advice.
In the short-term:
- Consider asking for payment extensions – “Beyond any savings (which is a pipe dream for most), bankers, suppliers, landlords and others might be willing to re-negotiate or extend deadlines in the short-term,” Kraft said.
- Check the perks of your payment service provider – “In terms of payroll, payroll companies like Paychex have services for clients to defer payroll debits for up to a week without fee. Small Business should inquire about it if they foresee a temporary delay in cash flow,” Falade said.
- Look for creative ways to manage cash flow – “One might be able to turn to customers through take-out and delivery options, pre-purchase of goods for later pickup, the purchase of gift cards that can be redeemed in the future or even crowd-funding support,” Kraft said.
In the long-term:
- Create a risk management plan – “I think it would be hard for anyone to predict preparation for this type of circumstance, but one might look at all aspects of risk management strategies as it relates to business models, lines of revenue and costs,” Kraft said.
- Build strong relationships that can weather any storm – “Even more than anything else, build tremendous relationships with your employees, customers, suppliers and the local community. These seem to be the folks most immediately that are able to help beyond the bailouts in creative and supportive ways,” Kraft said.
The United States Chamber of Commerce offers a number of additional helpful articles for small business owners. Check them out below:
Coronavirus Small Business Guide