The overall economy is on a tear right now, but for some businesses, things don’t look so rosy.
By the way, if that is you and your business (not so rosy), there are a multiplicity of grants, tax credits, and very favorable loans available — though doing it properly can be tough to navigate.
Let us help you: https://calendly.com/dhartaccounting/exploratory-meeting?month=2020-06
According to the latest federal estimates, about 200,000 MORE businesses permanently closed last year than would have in a normal year.
And I sincerely hope that your business is either back open, will be soon, or never fully shut down in the first place.
But regardless of which bucket you fall into, there are a number of “best practices,” which have been put forth by management consultants, business advisors, and those MBA “thought leader” types about how large businesses should be opening back up.
So, I thought it would be useful today to distill some of those lessons down into practical tips for small West Columbia businesses to become more resilient in crisis.
A couple quick reminders first…
- As of this writing, about $40 billion in PPP loan funding remains available. The application deadline is May 31, but the funding will probably be allocated well before then. If you haven’t yet applied for either first or second draw, be sure to do so.
(And as reminder — this is done through a lending institution, like your bank, or Paypal/Kabbage and the like)
- New guidance from the IRS last week allows businesses to deduct certain expenses on their 2021 business return that were paid for by PPP loan proceeds — if they weren’t deducted on the 2020 tax return. If you’re one of our Lexington County friends be sure to discuss this with us to make sure you capture these deductions on your 2021 return when we file it next year.
- The IRS is running behind on pulling Q1 estimated tax payments from accounts. Don’t fret if you haven’t seen yours pulled yet through an automatic withdrawal from your bank… they tell us that it’ll all be accounted for, and no penalties, etc. (But, best to keep your powder dry … you know, just in case. We’ll help with that if need be.)
Now, let’s dive into some tips for getting your West Columbia business back up to speed as the events of 2020 start to fade into the rear-view mirror…
5 Helpful Tips for West Columbia Businesses To Be More Resilient in Crisis
“The future belongs to those who believe in the beauty of their dreams.” – Eleanor Roosevelt
As the economy reopens and things begin to return to normal, one thing is clear: Normal ain’t what it was. I cringe every time I hear the phrase “new normal,” so I won’t use that phrase. Oh, drat, I just did. That was the only time, I promise!
So, as lockdowns are lifted, vaccines are doled out, and people leave their caves to see sunlight for the first time in a year, what can Lexington County business owners do to not only ease the transition back into business-at-full-speed, but also make your business resilient in crisis?
TIP #1 To Be More Resilient in Crisis: Make a Plan You Can Believe In
We don’t get into politics around here. We understand that everybody has different opinions on various things, and we respect that. Whatever your personal opinion happens to be about various actions over the past year, what’s been done has been done. That’s just the reality of where we are. Thus, your West Columbia business re-opening plan has to take that reality into account.
As you re-open your business, expand services, and the like, you need to be comfortable with how you operate. So do your employees and customers. If they don’t feel safe interacting with your business, then employees won’t show up for work, and customers won’t give you business. Be sure to have a rational conversation with your employees about their expectations (and yours) regarding things like disinfecting surfaces, use of PPE (which is tax deductible!), social distancing, and other factors. Everybody should be on the same page, and you can’t get there with your employees if you don’t have the conversation.
Most importantly, don’t ignore your customers. Develop an understanding of what YOUR customers will want your business to look and feel like as things return to normal. This doesn’t even necessarily have to be about whether you require customers to wear masks or not. No, this is about bigger picture things, and I want those in Lexington County to be bigger picture thinkers.
For example, many consumers have been spoiled by home delivery. This is now a permanent part of the business paradigm. Is this something West Columbia customers expect? Can you increase revenue by adding this service if you don’t already have it?
Consider the different products and services that you sell. Will some start to sell again faster than others? For example, it’s a great time to be a homebuilder right now because demand is so high. Figure out what will be in highest demand from your customers, and be prepared to meet that demand with extra inventory or expanded service capability.
If your business requires you or your employees to physically visit Lexington County job sites, make deliveries, or other on-site services, what are your customer requirements going to be for your staff? Some businesses are mandating that visiting service personnel be vaccinated, for example. You’re going to need to determine how to address this within your own business and with your own staff.
TIP #2 To Be More Resilient in Crisis: Shore Up Your Supply Chain
Sawmill shutdowns (resulting from a combination of government orders and sick employees) have caused the price of lumber to more than triple. Computer chips (and a current shortage of them) needed to make everything from cars to talking children’s toys have caused shortages of other goods and price spikes. One tiny boat plowing into the sand disrupted the global supply of motorcycle parts.
Supply chain disruptions happen all the time. Always have, always will. But as the business norm has shifted in recent years to “just in time” delivery, these little hiccups cause more harm than they used to.
Just because you’re a small West Columbia business doesn’t mean you’re immune to them. Several of our clients have already shared such stories with us.
Here are some quick tips to help ensure the survivability of your supply chain:
- Have multiple vendors. Never rely on a single source for supplies, materials, or inventory.
- Source locally, if possible. In addition to supporting local West Columbia businesses, you’ll save on shipping costs and tariffs, and you’ll minimize disruption caused by global incidents.
- Expand your own storage. Yes, this can add costs, but it can also prevent disruption. Have enough storage space to maintain a little bit of extra inventory or raw materials to allow your business to operate longer in the event of supply chain problems.
TIP #3 To Be More Resilient in Crisis: Embrace the Digital
Another permanent change to the economy is a greater reliance on all things digital. If you’re a bit of a technophobe, or you know that your business is technologically backwards, it’s time to step up to the plate.
There are certainly some big changes such as some jobs now becoming permanent work-from-home situations. If you have jobs like this in your company, you’ve already had to embrace the change. If not, take the time to evaluate which roles can be performed in this manner, and embrace the change. Some employees may need it, plus it can reduce your costs in other areas, like how much office space you need to lease.
Certain sales and service items are worth moving online also. From scheduling service calls to placing orders to making payments, modern consumers expect these modern digital conveniences – even from the smallest of businesses. If you’re not able to accommodate these consumer sentiments, it’s going to adversely impact your business. This trend started well before this most recent economic crisis; the pandemic merely accelerated and cemented consumer expectations.
TIP #4 To Be More Resilient in Crisis: Create a Disaster Response Plan
Floods, fires, hurricanes, pandemics (…toilet paper shortages). Disasters are simply part of life, and all of my Lexington County business owner friends need to be prepared for the next one. It’s not a matter of “if,” but “when.”
Nobody wants to think about what happens in a disaster, but thinking about it is exactly how you prepare for it. According to FEMA, more than 40% of local small businesses impacted by a natural disaster never reopen. Reach out to local emergency management agencies and discuss local contingency plans for how they’ll handle disasters that are common here in our area. Use this information to develop your own emergency response plan to ensure the long-term survival of your business.
TIP #5 To Be More Resilient in Crisis: Build a Cash Reserve For Your Business
Most financial planners advise that most individuals have an emergency fund of at least three months of expenses. Business consultants will typically recommend something similar for businesses.
Unfortunately, the majority of businesses never build such a fund. A year ago, most businesses had less than one month’s worth of expenses in the bank. Thus, when the economic bombshell dropped, many businesses were left unable to deal with it.
If you haven’t already, be sure to take advantage of opportunities to pad your bank account from external sources, including:
- Paycheck Protection Program (PPP) loans
- Economic Injury Disaster Loans (EIDL) directly from the SBA
- “Regular” SBA 7(a) loans
- State economic development grants
In addition to these external sources, get creative with generating cash flow from within your business. This is an excellent time to hold sales, implement new recurring revenue strategies, and offer pre-payment incentives for services.
Also, now might be an excellent time to negotiate credit and payment terms with vendors in order to improve your own cash flow.
Lastly, if you typically extend credit to your customers, you can quickly convert some of those accounts receivable into cash now through a process called factoring. Factoring can be an expensive source of cash, so you may not want to factor all of your receivables. But don’t ignore it as a strategic play for bolstering cash reserves, just in case.
Getting back to normal is a good thing, and we’re all looking forward to it in West Columbia. But, we all need to recognize the fact that “normal” isn’t what it once was. It’s a good idea to prepare your business, both financially and otherwise, to operate in this new business environment as the economy reopens. Let’s discuss how to get your business more resilient in crisis: