The coronavirus is having substantial economic consequences for businesses across the country – from the cancellation of events and reduced transactions to layoffs and a volatile stock market. During times of crisis, there are proactive steps businesses can take to help navigate and potentially minimize financial losses:
Revisit your 2020 budget and adjust anticipated net income. Circumstances may have dramatically changed since your budget was built, so your forecasted profit should change accordingly.
Minimize non-essential expenses wherever possible. Marketing, entertainment, and travel often can be cut back. Discontinue nice-to-have subscriptions and postpone celebrations for a later time.
Review business interruption insurance for potential coverage related to national emergencies. Many policies will not include such coverage, but it’s a good time to get familiar with gaps in your insurance.
Apply for Federal disaster loans and/or grants. These low- or no-interest resources can be used to offset physical and economic damage caused by a declared disaster. For more information, visit https://disasterloan.sba.gov/ela/
Inquire about increasing your line of credit. Talk to your bank to see whether you qualify for an increase in your line of credit. You’ll have to pay it back, of course, but it can help you weather tough times.
Wait to pay 2019 taxes until July 15, 2020. As of March 20, 2020, the IRS moved Tax Day to July 15, which means businesses have additional time to file and pay without interest or penalties. Delaying payments can enhance business cash flow.
Optimize staffing for your new workload. Payroll is most business’s largest expense. If decreasing payroll becomes necessary, start by exploring a voluntary reduction of hours or pay. In most situations, company leadership should take the biggest hit, and eliminating positions should be the last resort.
Leading through this storm requires calmness, clarity, and faith but also action. We’re experiencing a radical downturn in a very short period of time, and this downturn might require radical steps on your part to stay afloat. These are tough decisions to make. I encourage you to prioritize your mission and your people, and not make impulsive decisions based on emotion.
As always, our team is here to answer questions and discuss cash flow or debt management steps that are best for your business.
Category: Financial Service Team