How to help businesses during the COVID 19 impact on the whole market.
To keep your company healthy during the coronavirus outbreak and positioned well for success when it’s over, take advantage of these seven contingency and business planning tips.
1. Put health and safety first
If you’re a solopreneur or sole proprietor, prioritize your health first. Limit your travel and maximize home office communication and collaboration tools.
If you have employees, keep them informed of travel restrictions, and government announcements, and offer them work-from-home options. If that’s not feasible and your business is considered essential, take steps to minimize virus transmission risk at your place of work. This includes social distancing, splitting shifts, and frequent sanitization.
It’s also wise to establish procedures for staff to report if they are feeling unwell, are absent, or if they suspect exposure to the coronavirus or infection.
2. Assess the covid 19 impact on operations
What will happen to your company during the current crisis? Run best-case and worst-case scenarios and develop contingency plans for each to help answer that question. Include timeframes in your assessment that take into account the effects of a pandemic if it becomes a three-month, six-month, or one-year problem.
For example, how will your company handle changes if key personnel become ill or have to care for family members? Identify others, such as retirees, family members, or independent contractors and freelancers, who can step in and learn key tasks.
What effect will it have on your revenue forecast and sales cycle if one of your customers shuts down for a few weeks or months? Similarly, if government authorities require you to halt or adjust operations, what changes could you make to protect employees and revenues while continuing to serve customers?
Telework has increased dramatically during this crisis and should be factored into your strategy. Implement policies and technologies that encourage collaborative and secure at-home work (home networks and devices are susceptible to security vulnerabilities). This Small Business Administration (SBA) guide can assist you in assessing your cyber risk and taking steps to improve your security posture.
3. Reach out
Develop a communication plan to reach out to your clients, partners, suppliers, investors, and other stakeholders. Keep them abreast of your business policies at this time, any changes to operations, or new ways you can serve or collaborate with them.
4. Be ready to adapt
COVID-19 is changing our lives in ways and at a scale, we could never have imagined. The business plan you had 90-days ago isn’t what it is today. You need a plan to adapt and reconfigure your business for each stage of this crisis. If it’s a short-term problem, then cutting costs and another variable spending like marketing, new hires, and travel may help you through.
If your business has seen immediate impacts, look for ways to support your client needs or diversify your products and services during this time. For example, dog walking companies are keeping revenue flowing in creative ways. Some are helping clients in vulnerable age and health groups by doing their grocery runs. Others are finding new clients among at-risk groups or families with home-schooled kids who are suddenly in need of a dog walker.
It’s hard to look and plan too far ahead. However, if the pandemic and lockdowns continue for several months to a year, then you need another contingency plan; one that looks at renegotiating fixed expenses, cutting benefits, even layoffs.
5. Evaluate your finances
Any emergency or contingency plan should account for financial risk and impacts. Regularly update and track your cash flow forecast and look for opportunities to reduce non-critical expenditure. Also, review your accounts receivable and assess any credit risks.
Do you have a financial safety net that you can draw on? Many business owners have savings they can draw on. Another option is to secure a business line of credit before you need it, so you can draw on funds during a disaster or pandemic.
Alternatively, consider small business financial assistance programs to help you cover business expenses such as those administered by the Small Business Administration (SBA). Under the CARES Act, the SBA is providing low-interest disaster recovery loans of up to $2 million to businesses impacted by the situation. These loans, funded by banks but guaranteed by the SBA, can be used to pay fixed debts, payroll, accounts payable and other bills. Long-term repayments up to a maximum of 30 years keep payments affordable.
The CARES Act also offers small business owners a $10,000 advance on an Emergency Economic Injury Disaster Loan (EIDL) that does not have to be paid back. The program provides loans up to $200,000.
In addition to SBA loans, the federal government is also offsetting paid sick and paid leave costs for employers with an employer tax credit, equal to 100% of benefits paid. Self-employed individuals will also benefit from an additional $600 in unemployment insurance for up to four months – an important safety net that they generally don’t qualify for.
Some states have also implemented financial assistance for the self-employed. In Iowa, for example, sole proprietors and single-member LLCs that can demonstrate COVID-19 impact can qualify for grants between $5,000 and $10,000.
6. Stay on top of the fast-changing compliance landscape
If you operate an LLC, keep an eye on shifting developments at the government level that directly affect your work such as filing documents and turnaround times. Many Secretary of State offices have eliminated expedited services, while others have removed or greatly restricted counter service. Keep abreast of the Secretary of State’s availability and other impacts on our COVID-19 resources page.
Having a remote workforce can also introduce new state compliance requirements that must be considered such as state payroll and income tax filing, or the need to register to do business in a new state.
7. Be prepared for the light at the end of the tunnel
With your employees safe and healthy, and your operational and financial impacts mitigated as best you can; take stock and think about how you’ll successfully restore operations when the COVID-19 pandemic is over.
This is likely to be a life-changing event that could bring a wealth of new opportunities for startups and small business owners. Look for immediate gains like renegotiating contracts with suppliers and vendors. Listen to your customers and find ways to serve them. Find ways to introduce greater efficiencies into your business, such as reducing your physical footprint by making permanent your work-from-home policies. And consider your financial situation. Are there measures you can take to ensure you have healthy cash flow and a safety net going forward?
None of us knows what’s coming next or if we’ll face a pandemic like this again in our lifetimes. But it pays to have a plan to bring your business through emergencies like COVID-19 and ensure it’s in a strong position for recovery once it has passed.